Question

What are the three alternatives in financing current purchases for most consumers? Describe the trade-offs of each alternative.Pls explain in atleast 300 words.

Answer 1

Answer:

Three alternatives in financing current purchases for most consumers :

1. Draw on their savings
2. Use their present earnings
3. Borrow against their expected future income

Trade off :

Using credit increases the amount of money a person can spend to purchase goods and services now, but the trade off is that it decreases the amount of money that will be available to spend in the future. It is not reasonable to borrow for everyday living expenses. Consumer credit is based on trust in people's ability and willingness to pay bills when due. Credit when used effectively can help you have more and enjoy more.