A loan is an amount of money you borrow for some reason.  Loans help people buy cars and homes, pay off debts, or pay for their education.   Loans can help a person  temporarily. However, if people owe too much money, they may never be able to get out of debt.  In this case, loans can be harmful.

Debt is the amount of money someone owes. If you borrow $50.00, you have a fifty-dollar debt. Credit card debt is one kind of debt. Financial counselors tell their clients to get rid of credit card debt.  Credit cards charge minimum payments on the card, but minimum payments do not decrease your debt. In fact, if you only make minimum payments, your debt is never paid off.

Interest is what the moneylender makes when he lends someone money.  If a moneylender lends someone $100 at 6% interest for one year, the borrower will have to pay him $106 back. The moneylender makes a $6 profit.  If a moneylender lends someone $1000 at 25% interest for one year, the borrower will have to pay him $1250 back.  The moneylender makes a $250 profit.  It is always important to check what the total cost of a loan will be.  Then decide if the reason for the loan is good enough to  justify its cost.

In finances, credit has two meanings.  First, credit refers to the time given to pay money back.  For example, when people charge something on a credit card, they are allowed to pay the money back over a period of time.  Second, credit is a payment history or the record someone has of repaying debt.  Does he pay promptly, does he pay late, or does he not pay? A good record means good credit.  A poor payment record means bad credit.  Depending on a person's credit history, he may or may not get another loan. And with bad credit, he may have to pay very high interest.

Loans, interest, and credit are parts of modern life.  They can be good or bad.  It all depends on how people manage their money.  Who is in control? The person or the lender?