Why was buying on credit bad during the great depression?
There was no such thing as credit cards, so credit was set up with the store…groceries, etc. The banks closed during the Depression, and those who lost their savings had no money and were forced to either use credit or barter. The limits of that credit were individually negotiated, so you could be cut off without any warning. On the other hand, there were no limits to interest (usury) and the collection techniques were more like the mob in some cases. Credit also impacted farmers, forcing them into foreclosure in some cases. The entire structure of the Federal Reserve, Farm subsidies/relief, and banking were created to make sure it doesn’t happen again. Side note: there were some areas where they lived in a “company town”, worked for the company (coal mine, steel mill) and were forced to buy from the company store. That led to a kind of indentured service not far removed from slavery. Not really brought on by the Depression, but with a lack of alternatives (jobs) it was made worse. N
