This is an ongoing list of the costs of Debt which I shall add to as time goes on. Many items will seem to be repeats or the same thing in different words and some are just subtly different. They are so just forgive me. This is more of a brainstorm than anything else. If you have anything to add than add it in the comments and I will add it to the list when I get around to it.

Interest

Fines

Fees

Reputation Risk/Loss

Over inter-connectivity

Non-intuitive nature of Compound Interest

Greater Debt than necessary in society due to Debt Chains and Debt Loops

Puts people financially in the Red

Puts Businesses Financially in the Red

Budget Stress

Human Stress

Increased investment in non-performing Assets

increased investment in non-performing Businesses

Increased investment in non-performing Ideas

Amplifies Business cycles

Amplifies budget swings in non-fixed expenditures

Contributes to Divorce and broken Families

Contributes to stress related health problems

Contributes increased death resulting from health problems and suicide

Contributes to financial related health problems

Contributes to stress related relationship problems in people’s personal lives

Contributes to stress related relationship problems in people’s professional lives

Psychological costs of debt

Appearance of financial weakness

Fails to directly promote wealth creation

Ties up money

Lost opportunity costs

Investments made by shortsighted borrowers less likely to be as good as an investment as those by farsighted investors

Allows overly easy access to capital resulting increased poor usage and subsequent problems

Government “investments” via debt are less responsive to the Market feedback loops that keep good investments and eliminate bad investments resulting in less real wealth creation per dollar invested(if any).

Fails to align the interest of the Banks with that of their clients

Fails to maximize the profits of Banks

Fails to help banks build the wealth of their clients while at the same time building theirs

Fails to have unlimited profit potential

Remains overly dependent upon conditions of the economy as a whole and interest rate rather than the economy of a banks clients

Fails as a product to significantly differentiate itself from other credit products creating a commodity, increased competition, and less profit for banks.

Subjects Nations to more difficult financial choices than need be

Increase the Gap between Rich and Poor

Contributes to National financial instability

Contributes to Business financial instability

Contributes to Personal financial instability

Slows economic growth

Divides the interest of the Fed between creating enough flowing currency for people to meet their debt obligations and creating enough currency for  economic growth. Unless they happen to be the same they cannot do both.

Lending with the fractional reserves system leave part of currency creation in the hands of the Fed and part of it in the whims of the banks leading to instability and improper currency management.

Enslaves the Borrower to the Lender

Increases risks to Borrowers

Does not adjust well to fluctuating revenues

Inflexible

Puts people in difficult to recover from financial conditions

Places the burden of responsibility on the least responsible party…the borrower for repayment

The hidden costs of debt are indeed a cost of debt making for poor decisions

In the light of alternatives (joint investment and other non-lending forms of financing) credit financing has the greatest problems and the least benefits.

Costs of Bankruptcy(lawyers, courts, etc)

Costs of Foreclosure(lawyers, courts, etc)

Costs of Collection(lawyers, courts, etc)

Contributes to crime

Slows the flow of Assets through the economy

Invests based on collateral and (current) ability to make payment rather than on the quality of the underlying investment.

Leads a large percentage of financing to be in non-performing assets, businesses, people, and ideas which leads to slow economic growth.

Comes at the expense of focused real wealth creating joint investment

Expands the gap between rich and poor leading to french revolution style reforms (off with their heads)