Excellent article, which helps us learn and earn!

Essential :

A bank provides you “credit” in the form of credit card use, which is a loan, specifically an unsecured loan. A bank is essentially a “Credit Facility” , it provides “Credit” which allows commerce, buying goods like cars and homes, plus consumer goods. The bank makes money by loaning money and charging fees.

The bank loaned you cash. Cash has a property called liquidity, which means amongst other things you can buy anything with it. Or you can loan it to people to buy things with. The bank isn’t in the real estate business, they are in the money lending business. They lend money out and money comes back to them in the form of loan payments. If you can’t pay, they seize the security and sell it to get their cash back. Your asset be it a car or home is valuable, but it isn’t liquid. You can’t take your ownership papers to the store to buy food and you can’t send your child ownership papers to pay her bills in an emergency. You need something liquid like cash.

Laughed my ass off

Thanks