What is meant by the term "consumer credit"?

The term "consumer credit" specifically refers to the loans and credit that are provided to individuals for personal, household, or family use, which encompasses credit extended to consumers for purchases. This can include various forms of borrowing, such as personal loans, credit cards, and installment loans, enabling consumers to buy goods and services even if they do not have the full amount of cash available upfront.

Understanding consumer credit is vital for managing personal finances, as it affects how individuals can make large purchases, manage unexpected expenses, and build their credit history, which in turn impacts future borrowing ability. Options that focus only on loans for businesses, specialized credit cards, or finance options for home improvement do not capture the broader definition of consumer credit, which applies specifically to the borrowing behaviors and needs of individual consumers across a wide range of spending situations.