Credit and Debt
money owed to another person or company
Debt
the increase in value of a home over time; the difference between the amount owed and what the home could be sold for
Equity
A statistical number used to represent a consumer's creditworthiness
Credit Score
Interest
In one of the most famous Dr. Seuss books, the character Sam-I-Am is a serious advocate for what food?
Green eggs and ham
Visa, Mastercard, Discover, and American Express spend over ___________ a year on marketing alone.
$4 Billion
An asset that increases in value over time
Appreciating Asset
A company that collects credit rating information and makes it available to creditors
Credit Bureau
The original amount of a loan; the total amount borrowed before interest
Principal
King Henry VIII
There were no credit cards prior to _______.
1958
Credit that automatically renews whenever a payment is made to reduce the debt
Revolving Credit
Credit scores may also be referred to as ________ scores
FICO
When the value of an asset falls below what is owed on it
Negative Equity
Which year was the first iPod released?
2001
Explain why debt and credit are a bad idea. How could they negatively affect your life?
Debt and credit keep you in a cycle of paying for your past rather than saving for your future. It's a burden that prevents you from reaching your goals because your hard-earned money is tied up in making monthly payments
A legal claim against (or right to own) an asset until the debt is repaid
Lien
Why should you still monitor your credit report even if you don't plan to go into debt?
To spot signs of fraud or identity theft
The two major ways to finance a car
Direct financing (loan) and leasing
What is the name of the method used to quickly pay off all debt?
The snowball method
Describe marketing tactics that the credit industry uses to trick people into getting into debt.
They offer zero- or low-interest introductory rates that come with hidden fees later on; they say that you only have to make the minimum monthly payment, which keeps you in debt for years; and they advertise cash back and rewards, which is hardly any money and isn't worth it to stay in debt.
What is the danger of putting collateral up for a loan?
You could lose the loan collateral if you fail to make the payment on time.
Explain why the importance of a good credit score is a myth.
A FICO score doesn't measure how well a person handles money or how wealthy they are. It only shows how good you are at making payments on your debt.
List three ways the credit card industry makes money off of customers.
Through interest charges, cash advance fees, annual fees, over-the-limit fees, late payment fees and merchant fees.
What's the first step to the snowball method?
List your debts from smallest to largest.