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Lower interest rates and an amortizing repayment schedule can make installment debt a much cheaper alternative to revolving credit.
- Installment debt means the loan is paid off in a specified period of time by making predetermined payments periodically.
- Revolving credit is a line of credit that is instantly available through use of a credit card (and sometimes a check).
- As you pay down your debt in a revolving line of credit, the minimum payment is also reduced, thus extending your payoff period and, consequently, the interest you pay.
- Spending more than you earn in any given period is a dangerous practice at best, but doing it over an extended period of time can be financial suicide.
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