Short-term debt refers to financial obligations that are due to be paid within one year. This type of debt is commonly used by individuals and businesses to manage cash flow, cover immediate expenses, or finance short-term projects. Examples of short-term debt include credit card balances, personal loans, and lines of credit. Lenders typically charge higher interest rates on short-term debt compared to long-term debt, reflecting the increased risk associated with shorter repayment periods. Managing short-term debt effectively is crucial for maintaining financial stability, as failure to repay can lead to penalties and negatively impact credit scores.