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How Debt Actually Works
A credit card charges 22% and a mortgage charges 6% for the same reason, and it is not your credit score.
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Interest
Interest is an extra fee a borrower pays to a lender on top of returning the original amount borrowed.
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Credit card debt
Credit card debt is money owed to a card issuer after buying goods or services and not paying the balance immediately.
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Payday loan
A payday loan is a small, short-term unsecured loan designed to be repaid in full when the borrower receives their next paycheck.
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Usury
Usury is the practice of lending money at interest rates that are unfairly high or exceed legal limits.
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Collateral (finance)
Collateral is a specific asset or property that a borrower pledges to a lender to secure repayment of a loan.
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Debt collection
Debt collection is the process of pursuing payments of money or other agreed value owed by a person or business to a creditor.
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Garnishment
Garnishment allows creditors to take money directly from a debtor's employer or bank to satisfy an unpaid debt or legal judgment.
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Bankruptcy
Bankruptcy is a formal court process that helps insolvent people and businesses wipe out or reorganize debt rather than face ruin.