Education

The Psychology of Debt

Using loans or credit to buy things is not a new concept. In the 1800s, some people bought food and other basic supplies from the general store using credit—the storekeeper handwrote the buyer’s name on a list, keeping track of the total owed. When the buyer came back into town the following week, he paid off his debt. For some people, buying things on credit and having a little extra time to pay was key to ensuring they could buy items to meet their basic needs.