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2. Credit

When most people want to buy a big-ticket item like a car or large appliance, they often use credit because they do not have enough available cash. At the beginning of a credit situation, a consumer has a lot of purchasing or buying power. However, buying power decreases as a consumer continues to make purchases. There is a limit to how much you can spend on credit without becoming a huge financial risk. You must repay the creditor to increase purchasing power. Sometimes, your ability to continue to purchase on credit will depend on how faithfully and consistently you pay back the initial credit amount.

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