Consumer Credit

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Related to Consumer Credit: commercial credit, investment credit

Consumer Credit


credit granted to the population for purchasing consumer goods or services.

In capitalist nations, consumer credit is granted by commercial enterprises (in the form of deferring payment by the buyer for the purchase) and banks and other credit and financial institutions. The commercial enterprises that provide credit directly to purchasers then turn to the banks for credit. Thus banks are the basic creditors in the area of consumer credit. For instance, around 60 percent of the total consumer credit debt in the United States at the end of the 1960’s, counting direct and indirect crediting, was held by the commercial banks. As a rule, loans are granted for up to three years. The bank makes the loans at a rate of 10–12 percent per annum and often even more. This rate is a heavy burden on the consumers and creates colossal profits for the monopolistic banks.

Consumer credit in the capitalist nations, particularly in the United States, has steadily increased. At the end of 1970, the total debt of US consumers was $124 billion. Around 14 percent of the after-tax personal income of the US population is spent each year to retire consumer loans. The accelerated growth of consumer credit is related to the limited effective demand of the population and to chronic difficulties in selling goods under the conditions of modern capitalism.

Under socialism, consumer credit is provided to the population by the state, cooperative, and trade organizations for pur-chasing personal consumer products (such as refrigerators, television sets, radios, motorcycles, sewing machines, photo-graphic equipment, timepieces, rugs, and woolen and silk textiles). From 1961 to 1971 in the USSR, the volume of credit sales to the public in state and cooperative trade rose almost 3.4 times and in 1971 was around 3.8 billion rubles. Varieties of consumer credit include pawnshop credit and credit through mutual aid funds. In buying goods on credit, the purchaser puts up 20–25 percent of the price in cash. Depending upon the type of goods, the balance is paid over six to 12 months in equal installments. For certain goods, the repayment is extended up to two years. Interest for the credit is 1–2 percent per annum. Being a form of organizing earned income savings, consumer credit in a socialist society is aimed at providing the fullest satisfaction of the needs of the working people.


References in periodicals archive ?
The annual percentage rate of charge for consumer credit dropped from 37 per cent to 29 per cent, the average interest rate from 21 per cent to 17.
However, data from the Federal Reserve Bank of New York's Consumer Credit Panel suggests consumers may still be deleveraging.
It also wants to roll back competition from other mammoth banking groups in the consumer credit field by centralizing the management of customer information and other key data for the group's consumer credit business at Jaccs.
The principal significance of consumer credit is the way it regulates and ultimately limits the hedonistic qualities of consumer culture" (p.
Chau said the consumer credit delinquency will remain high in the second half of this year and may begin to decline by late next year after a new system to share credit information among lenders is to be set up early next year to counter the problem of delinquency.
Giving agency to the consumer, Calder suggests that Americans exploit consumer credit to rationalize the contradictions inherent in consumer capitalism and between the producer and consumer cultures.
In 2016, consumer credit providers (other than credit institutions), together with peer-to-peer lending platforms, granted 491 thousand new consumer credits, a decrease of 55.
consumer credit grew for the fourth consecutive month in November to top $2.
I am pleased to appear on behalf of the Board of Governors of the Federal Reserve System to address issues related to consumer credit.

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