Vocabulary 1.0
The smallest amount you can pay each month to keep your credit card in good standing is called the ____ ____.
Minimum payment
This type of card is tied directly to your bank account:
Debit card
What is the COMPOUND interest formula?
A = P(1 + R/N) nt
What is the SIMPLE interest formula?
SI = P x T x R / 100
A ___ ___ is an interest rate on a loan or investment that fluctuates over time
Variable rate
The ____ is the amount of money you borrow from a lender.
Principal
This type of card is linked to your bank account and limited to the amount loaded onto the card:
Prepaid debit card
What do these variables stand for?
A, P, T, M, R
A = Future Value
P = Principal
T = Time
M = Amount of Compounding
R = Annual Interest Rate
What do these variables stand for?
SI, P, T, R
SI = Simple Interest
P = Principal
T = Time
R = Annual Interest Rate
A ___ ___ is an interest rate on a loan, mortgage, or investment that remains unchanged for the entire life of the product or a specified term
Fixed rate
___ is the amount you are charged to borrow money from a credit lender
Interest
True or false: Debit cards and prepaid debit cards are the same
False!
Mr. Oh needs an emergency car repair and borrows $500 from his roommate. He agrees to a 6% interest rate, compounded annually. If Mr. Oh isn't able to pay him back until 2 years have passed, how much will he owe him by then?
$561.80
Jeffrey takes out a $600 loan at a 5% annual interest rate. If he repays the loan after 2 years, how much interest will he pay?
$60
A ___ ___ is a standardized way of presenting the key terms of your credit card agreement, so it’s important to thoroughly review it and make sure you understand all the different components that are included such as APR, fees, and more.
Schumer Box
The maximum amount of money that can be charged to a credit card is known as the ___ ___.
Credit limit
What is the ideal credit utilization ratio % ?
30%
Maya borrows $1,200 from her older brother to buy a high-end laptop for her graphic design classes. He charges her a 4% interest rate, compounded annually. If Maya pays him back in full after 1 year, how much will she owe him?
$1,248
Arianna wants to buy a bicycle and takes out a $1,000 loan. The loan has a 9% annual interest rate, and she plans to pay it back in 3 months. How much interest will Arianna pay?
$22.50
_____ is the ability to borrow money under the agreement that you’ll repay the debt later
Credit
A loan with a shorter term length will have __________ monthly payments, and you will pay __________ in total interest.
Higher, less
True or false: If your prepaid debit card is lost or stolen, people can't use it to access your personal accounts
TRUE
Abdias is a college student who really wants to go on vacation with friends but doesn’t have enough money saved up yet. His aunt agrees to lend him $800 at a 5% interest rate. How much would Abdias owe if the interest compounds annually and he repays his aunt in 1 year?
$840
Kehlani takes out a $3,000 loan at 12% annual interest and pays $720 in interest over time. How long did she take to repay the loan?
2 years
___ is the total yearly cost of borrowing money, expressed as a percentage. It includes both the interest rate and additional fees
APR (Annual Percentage Rate)