what credit is
This term refers to the original amount of money borrowed or the portion of the loan that is still owed, not including interest.
What is the principal?
Unlike a credit card, this type of card pulls money directly from your checking account at the time of purchase.
What is a debit card?
Paying this specific amount each month ensures you do not get hit with late fees and keeps your account in good standing, though you will still accrue interest.
What is the minimum payment?
This is the difference between gross pay and net pay.
What is: Gross pay is your total earnings before taxes and deductions, while net pay is your "take-home" pay?
This popular budgeting rule divides your after-tax income into three buckets: 50% for needs, 30% for wants, and 20% for savings.
What is the 50/30/20 rule?
This is a financial metric calculated by subtracting your total liabilities from your total assets.
What is net worth?
This is the standardized table or box required by law to be displayed on credit card applications and solicitations that clearly lists APRs, grace periods, and fees.
What is a Schumer box?
This is the ideal action you must take every month to avoid paying any interest on your credit card purchases.
What is paying your balance in full?
This type of expense stays the exact same amount every month
What is a fixed expense?
The primary advantage of the 50/30/20 strategy
What is its simplicity and flexibility?
These are the three fundamental components of a line of credit that dictate how much it will cost you to borrow.
What are the principal, interest rate, and term?
For young adults under the age of 21, this is a requirement for getting approved for a credit card on their own without a cosigner.
What is proof of independent income?
This is the primary reason many consumers choose to use credit cards rather than cash or debit for their everyday purchases.
What is to build credit history, earn rewards, or for fraud protection?
This expense category fluctuates from month to month and is often where you have the most control to cut back.
What is a variable expense?
This is a common disadvantage of the "pay yourself first" strategy if you do not track your remaining spending.
What is overspending in your variable/lifestyle categories?
To expand your understanding of these core financial concepts, review the Intro to Credit Student Activity Packet to master loan components and credit types.
What is Intro to Credit Student Activity Packet?
This type of card requires you to load money onto it before you can spend it, meaning it does not build credit.
What is a prepaid debit card?
This is the designated time period between your statement closing date and your payment due date during which you are not charged interest.
What is the grace period?
These two mandatory deductions are the biggest reasons your net pay is lower than your gross pay.
What are income taxes and payroll taxes?
This budgeting approach requires you to only spend the money you deposited in your account during the previous month.
What is budgeting last month's income (or "age your money")?
These are the three major categories of credit that you can interact with as a consumer.
What are revolving credit, installment credit, and open credit?
For consumers under 21, these are the two primary ways to access a credit card.
What are becoming an authorized user on someone else's account or applying with a cosigner?
This is the mathematical formula used daily by credit card companies to calculate the interest being applied to your balance.
What is the Daily Periodic Rate (APR divided by 365)
This type of expense only happens once or a few times a year, which is why people often forget to budget for them until they hit.
What is a periodic (or irregular) expense?
This strategy works by dividing your cash into physical envelopes for different spending categories, which stops you from overspending once an envelope is empty.
What is the envelope method?