How Do American Consumers Borrow? Young consumers often have not established their credit ratings. Many do not have steady incomes. They might have difficulty borrowing money from an agency in business to make loans. Parents or relatives are usually their best source of loans. Of course, the parents or relatives would have to have money available and be willing to lend it. You might even get an interest-free loan. However, a parent or relative who lends should receive the same interest as any other lender. There are disadvantages in borrowing from parents or relatives. One is that they may not insist on you paying back the money by a certain time. As a result, you might let the loan drag on. This is especially true if you are not required to pay interest. This is not a way to develop good credit habits. For most consumers, the cheapest place to borrow is at a commercial bank. Banks are a good source of installment loan which may run for 12 months or up to 30. Most banks also make single-payment loans to consumers for short periods—30,60,or 90 days. The newest type of bank loan is one that a depositor can get simply by writing a check. It is usually called something like 'ready credit' or 'reserved checking.' It works like this. A depositor is given a limited amount of credit, usually between ＄500 and ＄1,000. He or she may write checks up to the amount allowed. Once a check has been written, the amount of the check becomes a loan. Usually no charge is made for interest until the loan is made. A typical interest rate is 3 cents per ＄100 per day, or just under 1 percent a month. Suppose that you used ＄100 of your credit and repaid it in 30 days. The cost would be 90 cents. If you repaid it in 10 days, the cost would be only 30 cents. The advantage of borrowing from a bank is that banks generally charge lower rates than most other lenders. One reason is that banks have more strict credit requirements than most other lenders. A consumer must have a fairly good credit rating to get a bank loan. According to the first paragraph, young people ______.