Here we go again! We just avoided the fiscal cliff and now we’re headed for the debt ceiling. Misinformation and half-truths are the headlines of the day as the political rhetoric rises. So in this Prosper On I want to set the record straight. I’ll start with an explanation of the debt ceiling and then take a look at the arguments for raising it and why that’s not the best idea. We’ll get started with an example.
Let’s use our fictional character Bob. Bob has a credit card and was doing a good job paying off the balance every month. Along came an unexpected expense like an auto repair or emergency. Now normally this would be no problem for Bob, but money was tight that month and he decided to keep a small balance on his credit card. The balance was so small he didn’t notice the 20% interest charge.