Basics
What is credit?
A system that allows you to buy now and pay later.
What do many people carry from banks to make purchases?
Credit cards
What does credit usually involve?
Interest.
Define “purchases” in your own words.
The things that someona has bought
What is the money you owe on purchases called?
Who pays the seller right away when you use a credit card?
The bank.
What is the original purchase price or loan amount called?
Principal
Define “borrower.”
a person who takes money from a lender with a promise to pay it back
Why can credit be a helpful financial tool?
It lets you make purchases when you don’t have cash right away.
hen do you repay the bank for your purchases?
At the end of the month.
What is added on to the principal when you use credit?
Interest
What is “income”?
money earned from work or other sources
What problem can happen if you don’t repay your debt on time?
Serious financial problems that may stay with you for life.
What is a loan to buy a house called?
Mortgage.
How is interest usually calculated?
Monthly, as a percentage of the balance you owe.
What is “wages”?
money paid to a worker for their services
What do you promise when you use credit?
To repay the money later.
Name one expensive item people usually buy with a bank loan.
When you use credit, what two things do you end up paying?
Principal and interest.
What is "OWE"
to have to pay or give back money to someone