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Contents

Introduction 5
Learning Outcomes 6
1 Debt 7
2 Exploration of debt 9
2.1 Debt: concepts and evidence 9
2.2 When are debt levels too high? 11
2.3 Liberalisation in the financial services industry 15
2.4 Structure of the financial services industry 16
3 Debt costs 20
3.1 Some basics of debt and interest 20
3.2 The official interest rate 20
3.3 More on interest 22
3.4 Annual Percentage Rate (APR) 25
3.5 Interest rates and individuals 26
4 Debt and household finance 28
4.1 Income and expenditure, and debt 28
4.2 Liabilities and expenditure 29
5 The borrowing process 30
5.1 How to finance a purchase 30
5.2 Which debt product? 31
5.3 Accessing debt products 34
6 Conclusion 37
References 38

Keep on learning 41
Glossary 41
Acknowledgements 43

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