Advantages Of Debt

Leverage: that is to say, a person, a couple or a company may purchase goods and services through debt which had not been able to purchase with your regular income. Better use of personal and/or business finances which you can see, inter alia, when real interest rates are negative. I.e., inflation exceeds interest rates offered by banks on savings instruments, therefore, it is better for people to acquire goods and services through debt that save for then buy them when the full cash. Support for emergencies, although it is not ideal, a credit card can help you to overcome an emergency, either of this nature medical, or other reasons. Even to afford important things such as education of the debtor or another Member of your family.

Use of credit cards in travel: all travelers know that when you rent a car, take a cruise on the Caribbean or pay a hotel (among other things), it is always required a credit card to the customer, therefore, they are made of the utmost importance when traveling. Debts are not revalued: in countries with recurrent high inflation, as it is the typical case of Venezuela and borrow has an additional advantage is that debts cannot be revalued, but remain constant. Example: you buy a car in Venezuela and in a year that car probably will be worth more than what you paid to buy it. You buy an apartment in Venezuela and in a year that apartment surely will be worth more than you paid to buy it. Wages and salaries, although they do not increase in the magnitude that one wants, usually enjoy any annual adjustment, although it is decreed by the central Government. But a debt remains constant over time, i.e., if you borrowed 10,000 Bs.

$, that capital will not grow over time. Therefore, and taking into account that there is a principle of finance which says more worth $1 today to $1 tomorrow, intuitively, one might think that custom that time it goes by, it becomes more easy or less heavy for the debtor specifies the fact of paying a debt. It creates a positive endorsement with financial institutions. The way you pay your credit cards is a splendid endorsement for banks when you want to request greater amount credits, as loans for vehicles or mortgage. Debts made that buyer shares the purchase with one creditor does not share the gain of the profitability of the purchased good. Example: suppose that you want to buy an apartment for lease, if you do, then you’re buying that good with money from two entities, you and the company or financial institution that gives you credit. But all profits or rental income out-of-Pocket entering him in its entirety. M.S. Felix Gonzalez j.

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