“Best practice is to close the credit accounts and pay cash.“
“I wonder what the overall effect on the economy will be as more people move in that direction though?”
I believe it would have a positive effect on the economy. The debtor is slave to the lender, and we’ve created a nation of slaves. Plus paying cash tends to remind people not to spend more than they take in.
Certainly I agree with you, but the transition will be very painful. The most instructive numbers I have seen were comparing current situation to Great Depression, such that household debt was 100% of income in 1930, first time that had ever happened; by the time depression was over , it was 20%, didn’t go above 50% until the 80’s, then exceeded 100% again this decade; since ‘09, reduced to only 92%, so the argument is , it’s a long way to go.