How did credit card debt play a role in causing the Great Depression?

Answer 1

Prior to the 1920s, people usually borrowed to finance a new business, get crops in the ground, buy a house, or improve an existing business. The 1920s saw people borrowing simply to improved their lives, purchasing things like refrigerators, cars, entertainment equipment, etc. They went into debt merely to consume products, not to produce anything. One of the major causes of buying on time (installment buying) was the amount of inventory produced by businesses aimed at consumers, and advertising. This new form of "business activity" convinced people they needed things which they had never particularly noticed before.

Answer 2

When the working class bought stocks on credit thinking that they would make a profit and pay back the banks they were wrong after the Stock Market crashed. They were unable to sell their stocks and so they had nomoney to pay back their loans to the bank.This resulted in banks not being able to give their depositors their money when they came to the bank to withdraw their money.People were losing their money and life savingsand there was a great panic. In turn everyone rushed to the banks to withdraw their money, at the same time, and so banks failed, they had to shut down. This situation contributed in large to the Great Depression.

Answer 3

When people would buy expensive things on credit, and then buy more expensive things on credit, when the bill came around they couldn't afford it, and then what had been bought would be repossessed, but oftentimes what had been bought would lose value. thus, causing the great depression

Answer 4

In the 1920s, people would often buy things on credit, without much concern about how they would pay it back. When the Great Depression started, many people were already in debt and could no longer pay back what they owed. This led to the collapse of many businesses.

Answer 5

At the time of the Great Depression, the Credit Card was not in use.