Understanding Credit
This is money borrowed with the promise to repay it later, usually with interest.
What is Credit
This is the percentage rate used to calculate interest on unpaid credit card balances.
What is APR (Annual Percentage Rate)
This is the upfront amount paid when taking out a mortgage or auto loan.
What is a Down Payment
Missing payments can cause this to drop, making it harder to borrow in the future.
What is your credit score
Your friend wants to buy a car but can’t afford it without a high-interest loan. What should you advise them to do first?
What is consider saving more, reviewing the loan terms, or choosing a cheaper option?
This person is the one who lends money; the borrower is called a debtor.
What is a Creditor
This period allows you to pay your balance in full without being charged interest.
What is the Grace Period
This type of interest rate does not change over the life of the loan.
What is a fixed interest rate
Using a credit card to buy things you can’t afford can lead to this problem.
What is debt
You receive double credit card reward points by mistake. What should you consider beyond the legal obligation?
What is the ethical choice (reporting it to the company)?
This term describes the cost of borrowing money, expressed as a percentage.
What is the interest rate
This type of credit card fee is charged when a payment is not made on time.
What is a late fee
A mortgage is a loan used to purchase this.
What is a home
If you borrow money, whose responsibility is it to pay it back?
Yours
A family wants to buy a house but has almost no financial cushion. What is a major risk?
What is financial strain from high mortgage payments and unexpected expenses?
This major risk of credit involves owing more money than you can afford to repay.
What is Debt
This is a type of loan that is backed by collateral.
What is a secured debt
This is something you pay if you do not put 20% down on your house
What is PMI (Private Mortgage Insurance)
If a credit card company tells you the minimum payment is $25, should you only pay the minimum?
No. Sometimes only paying the minimum doesn't ever pay off the full debt over time.
Emma wants to start building credit. What simple habit will help her the most?
Paying her bills on time
This is a legal process wherein an individual or company seeks relief from some or all their liabilities.
What is bankruptcy
Credit cards can be either secured or unsecured. A secured card requires this.
What is collateral
This risk occurs when a loan has unclear terms or extremely high interest rates, often causing payment problems later.
What is predatory lending
If you lose your job, is it still important to make your loan or credit card payments?
Yes, you are still responsible for your bills
A student buys gas and food with a credit card but pays the full amount every month. How much interest will they pay?
None! As long as they pay before or on the due date.