What is credit?
Correct answer
Answer B: Receive now, pay later.
Quick explanation
Until you pay or repay what you owe, you have a debt or financial obligation.
Detailed explanation
Debts are obligations to a creditor. The debtor receives, for example, money, goods or a service and must provide the agreed payment or return later. For a loan, this normally includes repaying the borrowed amount, plus interest and possible fees.
Debt shifts purchasing power through time: spending becomes possible today even though the income needed to cover it will only be earned in the future. This can make sense if repayment is planned realistically. At the same time, the obligation commits part of future income and can reduce financial flexibility.
Not every future payment is automatically a debt. What matters is that something has already been received or that a legal or contractual obligation exists. Nor are debts inherently good or bad. Their effects depend on factors including purpose, total cost, duration, risks and ability to repay. The amount borrowed alone is therefore not enough for a sound assessment.
Example or everyday application
You receive a loan of 1,000 euros today and agree when and under what conditions you will repay it. The money is available now; at the same time, you take on an obligation to the lender.
Common misconception
A loan is not additional income with no obligations. What you receive is offset by a debt; possible interest and fees are added under the agreed terms.