Vocab
The total amount of money you owe to banks, credit cards, or other lenders.
What is debt?
This is the official currency of the United States.
What is the US dollar?
This type of credit card allows you to borrow money up to a certain limit and pay it back later, often with interest.
What is revolving credit?
This "C" refers to how trustworthy a person is when it comes to paying back a loan.
What is character?
This is the act of making regular payments to reduce what you owe.
What is paying off debt?
A monthly plan that helps you manage your income, expenses, and debt payments.
What is a budget?
This institution sets interest rates and manages the money supply in the United States.
What is the Federal Reserve?
This type of loan is used to purchase a home and is paid back in fixed installments over time.
What is a mortgage?
This "C" looks at how much money you earn and how well you manage your income and debts.
What is capacity?
This is the maximum amount of money you’re allowed to borrow on a credit card or loan.
What is a credit limit?
The smallest amount you must pay each month on a loan or credit card to avoid late fees.
What is the minimum payment?
This term describes the fee a bank charges for lending money, often expressed as a percentage.
What is interest?
This type of credit is typically used for major purchases like cars and has a set repayment schedule.
What is installment credit?
This "C" is about what you own that can help repay the loan if you don’t pay it back.
What is collateral?
Making only this small payment each month on your credit card means your debt will take longer to pay off.
What is the minimum payment?
A record that shows how well you’ve managed credit in the past, used by lenders to make decisions.
What is a credit report?
Known as QE, this monetary policy involves central banks buying government securities to inject money into the economy.
What is quantitative easing?
This type of credit is extended for a specific purpose and must be repaid in full by a certain date, often used by businesses.
What is trade credit?
This "C" considers how much money you have saved and what you already owe.
What is capital?
This type of plan helps you combine several debts into one payment, often with a lower interest rate.
What is debt consolidation?
A process where multiple debts are combined into one loan, usually with a lower payment or interest rate.
What is debt consolidation?
This international agreement, abandoned in the 1970s, once pegged currencies to a specific amount of gold.
What is the gold standard?
This rarely used type of credit involves borrowing without a specified repayment schedule, often based on the lender's trust.
What is open credit?
These 4 C’s help lenders decide this important thing about your loan application.
What is your creditworthiness?
This strategy means paying off the smallest debt first to build momentum, even if it's not the highest interest.
What is the debt snowball method?