Most of us, at one time or another, have looked at an item and thought “That would make my life so much better – now if only I had the money to buy it“. Credit is the solution used by many people in this dilemma.

In many ways, it is as though a bank were saying to the person “No problem, you can have that item. I’ll pay for it now, and you can pay me back over time”.

In this, the bank is acting as the generous friend who reassures you that you can have what you want without needing to worry unduly about how you’re paying for it.

The major problem with that is that banks need to make their money back, and are not your friends.

A friend would, in most cases, be willing to forego some of the money if you really couldn’t pay it back. They would understand your good intentions and would know that some day you would do them a favor for which they would be thankful.

Banks do not – and cannot  operate in this way, as their business relies on being strict with how they control credit. They cannot afford to be your friend. So when you borrow money from a bank and cannot pay it back, suddenly you are on your own.

For this reason it makes sense to be very careful when borrowing from a bank.

It really makes sense to be careful with any borrowing – no-one likes letting a friend down. But when banks are involved, being in debt can be a very lonely experience.