eli5: What is the difference between Money and Credit??
In: Economics
This is probably the best explanation of it. And how it plays a role in the greater economic picture.
Money is how much spendable stuff you have now.
Credit is how much money people are willing to lend you.
Almost always you have to pay back more money than you borrow.
Sometimes you can promise to give a person a valuable thing (like your house) if you don’t pay back the money you owe. Thus allowing you to get more credit than you have money.
Credit is money borrowed, Money is the cash you use for transactions. Credit is also better than Money ( cash/debit) …
Money = Here’s a thing that you can use to buy things. If I buy something from you with money, then our transaction can be done then and there
Credit = I owe you something in the future. If I offer you credit, then I owe you something, usually money, in the future for you giving me something now, also often money.
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