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Credit

For other uses, see Credit (disambiguation).
A credit card is a common form of credit. With a credit card, the credit card company, often a bank, grants a line of credit to the card holder. The card holder can make purchases from merchants, and borrow the money for these purchases from the credit card company.
Domestic credit to private sector in 2005

Credit (from Latin verb credit, meaning "one believes") is the trust which allows one party to provide money or resources to another party wherein the second party does not reimburse the first party immediately (thereby generating a debt), but promises either to repay or return those resources (or other materials of equal value) at a later date.[1] The resources provided by the first party can be either property, fulfillment of promises, or performances.[2] In other words, credit is a method of making reciprocity formal, legally enforceable, and extensible to a large group of unrelated people.

The resources provided may be financial (e.g. granting a loan), or they may consist of goods or services (e.g. consumer credit). Credit encompasses any form of deferred payment.[3] Credit is extended by a creditor, also known as a lender, to a debtor, also known as a borrower.

  1. ^ Credit (def. 2c). Merriam Webster Online. Retrieved 5 March 2015.
  2. ^ Chorafas, Dimitris N (2005). The management of bond investments and trading of debt. Elsevier Butterworth-Heinemann. p. xii. ISBN 9780080497280. Retrieved 16 January 2023.
  3. ^ O'Sullivan, Arthur; Sheffrin, Steven M. (2003). Economics: Principles in Action. Needham, Mass: Pearson Prentice Hall. p. 512. ISBN 0-13-063085-3.

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