Short-term Debt

Short-term debt refers to borrowed money that must be repaid within a year. It is commonly used by individuals and businesses to cover immediate expenses or manage cash flow. Examples include personal loans, credit card balances, and business lines of credit. Since short-term debt usually comes with higher interest rates than long-term loans, it often carries more risk. However, it can be beneficial for managing urgent financial needs or taking advantage of short-term opportunities, as long as the borrower can repay it promptly to avoid accumulating high-interest repayments.