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Show Banking Bits by W. Lee Bean 'mortgage you can actually be living in the house and enjoying it for those thirty years and by the time the mortgage is paid off, you're usually making much more money per month, though your monthly payments have stayed the same. Credit starts businesses, provides jobs, makes it possible for families with only moderate incomes to have homes, cars, vacations while they're still young enough to enjoy them. Most people do not borrow frivolously, and they only borrow what they know they will be able to pay back. Credit spreads the money around so we all can benefit. Q. "Grandpa always paid cash for everything and was proud of it. But what's wrong with credit if it's used wisely" A. Many people don't understand that credit is actually a way of putting people's savings to Work for the economy. It takes money to earn money. Suppose you're the son of a wealthy family and you want to start your own shipping company. You ask dad to finance you, and take as much money as you need to start your business, telling him, "thanks a lot." But suppose you still want to start that shipping company and you have no inheritance. You have a good idea, you know you can make money, you have the know-how, but you have no capital to get started. That's where credit comes in. You can get investors to buy stock in your shipping company com-pany or you can borrow from a lending len-ding institution such as a bank. These institutions are the middle men who make people's savings available for lending to others. You must pay them back with interest for their risk. As soon as you begin to make money, you can pay back the loan, or pay dividends to your investors, Your business is on its way-but you couldn't ' have done it without credit. If you had to pay cash for a home it might take you thirty years to save enough out of your salary. With a |