What term best describes the debt that you owe to others, like credit cards and loans?

The term that best describes the debt owed to others, including credit cards and loans, is "liability." In financial terms, liabilities are defined as obligations or debts that an individual or entity is responsible for repaying in the future. This includes any amounts owed to creditors, such as loans taken out for expenses, outstanding credit card balances, or other similar financial commitments.

Understanding liabilities is crucial in the context of personal finance or business management because they represent the portion of your finances that requires future cash outflows. It is also an essential component of the balance sheet in accounting, where liabilities are listed alongside assets to provide a clear picture of financial health. This distinction helps individuals and organizations evaluate their solvency and make informed financial decisions.

The other terms provided—assets, investments, and debt obligations—serve different purposes in financial vocabulary. Assets represent what one owns, investments pertain to allocated funds aiming at growth, and debt obligation is a broader term often used interchangeably with liabilities but is less specific in this context. Thus, liability is the most precise term to describe the debts owed.