Debt is money borrowed that must be repaid. It usually comes with interest, which is the cost of borrowing. Individuals take on debt through credit cards, student loans, and mortgages. Governments issue bonds. Companies borrow to expand. Debt is a tool. Used well, it funds education, homes, and business growth. Used poorly, it traps people and nations in cycles of repayment.

Not all debt is bad. A mortgage lets a family buy a home they could not afford with cash. A student loan can lead to higher earnings. The problem is when debt exceeds the ability to repay. High-interest debt, like payday loans, is especially dangerous because the interest compounds quickly.

Debt levels are measured relative to income or GDP. A country with debt at 100 percent of GDP is not necessarily in crisis, but the trend matters. Rising debt with slowing growth is a warning sign. Lenders watch these ratios closely.

Common types

• Consumer debt: credit cards, personal loans
• Student debt: education loans
• Mortgage debt: home loans
• Corporate debt: business bonds and loans
• Government debt: treasuries and sovereign bonds