Final answer:
The statement comparing payday loans to credit card debt is typically false because payday loans tend to be more costly due to high-interest rates and fees. Building an emergency fund and careful borrowing are essential for financial health. College students and businesses rely on financial markets to manage expenses and investments with the expectation of future repayment.
Step-by-step explanation:
The statement that the cost of financing with a payday loan is more reasonable than the cost of obtaining credit through a credit card is generally false. Payday loans often have much higher interest rates and fees compared to credit cards, making them a more expensive form of borrowing. Credit scores and credit utilization play a key role in managing one's finances responsibly.
An alternative to payday loans might be waiting until you have the funds to spend. Emergency funds can be difficult to build but are crucial for financial stability. Borrowing should be considered carefully, evaluating whether one can repay the debt in the future.
For example, college students often need to borrow money to cover education costs due to low or nonexistent income. Once they start working, they can repay what they have borrowed. This principle applies to individuals purchasing homes or cars, and businesses investing in long-term projects. Financial markets serve these demands, and confidence in repayment can influence the availability of financial capital.