Types of Credit
This is the amount of money borrowed
principal
The annual cost of credit charged by a lender
Annual percentage rate (APR)
What can only be used in stores of the company that issued it
Proprietary Credit Card
What is the potential of credit not being repaid
Credit Risk
Loans that are required collateral are knows as
Secured credit
The formula to find simple interest
Principal (P) X Rate (R) X Time (T) = Interest
True or False- Businesses don't have to pay a fee when customers use a debit or credit card
False!!!
What is a list of the individuals or businesses that owe money to a company
Accounts Receivable
The total amount paid by a borrower to a lender for the use of credit
Finance charge
True or false- Is there a risk using credit
Of course!!!
List 1 of the 3 C's of Credit
1. Character
2. Capacity
3. Capital
What shows when account receivables are due, as well as the length of time accounts have been outstanding
Account receivable aging report
This is a loan for a specific amount of money that is repaid with interest in regular installments
Installment Loan
What law protects consumers from billing errors and provides outlets to challenge incorrect statement
Fair Credit Billing Act (1974)
List 2 of the 3 C's of Credit
1. Character
2. Capacity
3. Capital
What is a company that collects past-due bills for a fee
Collection Agency
This type of credit is a loan for a specific amount that must be repaid with interest by a specified date or according to a specified schedule
closed-end credit
What would be the interest on something that is 700$ with a rate of .12 and T=1 (Y'all can use a calculator if you know the equation)
$84
What is a written set of guidelines used by an organization to determine how many and which customers will be approved for credit
Credit policy
What do customers get when credit is extended
Rewards!