Credit
The lower your credit score the higher the ______ rate
you will pay on loans
Interest
How do credit cards work?
They are loans
A yearly fee that may be charged for having a specific credit card, independent of how you use the card
Annual Fee
The cost you pay each year to borrow money, including fees, expressed as a percentage
Annual Percentage Rate (APR)
The act of transferring debt from one credit card account to another, usually for a fee
Balance Transfer
A credit card service that allows cardholders to withdraw a certain amount of cash, either through an ATM or directly from a bank, typically at a high interest rate or for a fee
Cash Advance
A credit card benefit that pays the cardholder a small percentage of their net expenditures, often as cash, payment toward their balance, reward points, travel miles, or gift cards
Cash Back
Something valuable that the lender can take as payment if you can't or don't repay your secured loan
Collateral
Someone who legally agrees to take responsibility for a person's debt if they cannot repay it
Cosigner
A plastic card that allows you to make purchases now with borrowed money, which then you must repay to the lender in one lump sum or in monthly payments with interest
Credit Card
A legal document that outlines the terms and conditions for using your credit card
Credit Card Agreement
The maximum amount that may be borrowed on a credit card
Credit Card Limit
The amount you owe as the cost of borrowing money
Interest
The rate charged for borrowing money usually expressed as a percent of the amount borrowed
Interest Rate
The smallest amount of a credit card bill that a credit card holder must pay during a billing cycle to remain in good standing with the lender
Minimum Payment
A partial payment made in cash at the beginning of the purchase of a good or service, while the remaining balance is due later or is financed as part of a loan
Down Payment
A loan with an interest rate that does not change over the life of the loan
Fixed Rate Loan
A loan taken by individuals and businesses to make real estate purchases without paying the entire value of the purchase up front
Mortgage
Original amount of money borrowed, separate from interest or fees
Principal
The amount of time you have to repay your entire loan
Term
A nonprofit financial institution that is owned by its members and organized for their benefit
Credit Union
What is the least effective way to get a credit card?
pre-approved offer in the mail
Factors that affect a borrower's ability to repay the loan
capacity
The typically low rate charged during the introductory period after a credit account is opened, after which the regular, typically higher, APR will apply
Introductory APR
A borrower's reputation for paying bills and debts based on past behavior
Character