Private debt and Public debt are crucial for anyone studying finance or economics, and for those involved in governmental or personal financial planning. These two forms of debt play pivotal roles in global economics and influence everything from national fiscal policies to individual credit scores.

What is Private Debt?

Private debt refers to money borrowed by individuals, businesses, or other private organizations from private lending institutions, other entities, or financial markets. This type of debt is used to fund personal expenditures, business expansions, or other private financial needs and is typically secured or unsecured based on the borrower's creditworthiness.

Examples of Private Debt:

1. Personal loans and credit card debts used by individuals.
2. Corporate bonds and business loans utilized by companies.
3. Mortgages taken out by homeowners.

What is Public Debt?

Public debt, also known as government or sovereign debt, refers to money that a government borrows to fund public spending when tax revenues are insufficient. Public debt is raised through the issuance of government bonds and other securities and can be held by domestic or foreign investors.

Examples of Public Debt:

1. U.S. Treasury bonds issued by the federal government.
2. Municipal bonds issued by local or state governments.
3. Foreign bonds issued by a government to international investors.

Differences Between Private Debt and Public Debt: 

Basis	Private Debt	Public Debt
Definition	Debt incurred by private individuals or entities for personal or corporate finance.	Debt incurred by national or local governments for public financing.
Borrowers	Individuals, companies, non-governmental organizations.	Federal, state, or local governments.
Purpose	Typically for personal or business investments, consumer spending, or capital expansion.	To finance public projects, social programs, and to manage the national economy.
Sources	Banks, private lenders, financial institutions, bonds.	Domestic or international bond markets, international financial institutions.
Interest Rates	Often higher, reflecting the credit risk of the borrower.	Generally lower, backed by government credibility and tax-raising powers.
Risk	Risk level varies widely, higher for unsecured loans.	Lower risk due to government backing, except in cases of high national debt.
Impact on Credit Score	Direct impact on an individual or company's credit score based on repayment history.	No direct impact on individual credit scores, but affects national credit rating and economic stability.
Examples	Credit card debt, auto loans, personal loans, corporate bonds.	U.S. Treasuries, municipal bonds, gilt-edged securities.