Credit Terms 1
Combines debts into one loan with lower payments.
A fee for using money charged by a creditor.
What is interest?
A loan given in cash by a credit card company.
What is a cash advance?
The factor that affects your credit score the most.
What is payment history? (i.e. late payments, past due accounts etc.)
You earn $3,600 each month. You have the following monthly expenses: $600 rent, $300 car loan and $150 debt payments. Find Your debt-to-income ratio to the nearest tenth of a percent.
What is 29.2%?
An agreement to obtain money, goods, or services now in exchange for a promise to pay in the future.
What is credit?
An amount of time allowed to repay a debt without having to pay interest charges.
What is grace period?
One of the 3 C's - money beyond debts owed.
What is capital?
The ratio used to determine how much credit you can afford.
What is debt to income?
You are charged a finance charge on a credit card balance of $800. Her card has an APR of 18%. What is the monthly periodic rate rounded to the nearest hundredth?
0.18/12 = 1.5%
Determines the cost of credit on a yearly basis.
What is APR?
Lends money or provides credit.
What is a creditor?
One of the 3 C's - the ability to repay a loan
What is capacity?
When a loan is backed by collateral.
What is a secured loan?
How you calculate the monthly periodic rate of interest.
What is divide the APR by 12?
Something of value the bank can take if the borrower does not make the loan payments.
What is collateral?
A legal process where the borrower is relieved of debts after showing an inability to pay.
What is bankruptcy?
This is the maximum amount a cardholder can charge.
What is credit limit?
The amount of borrowed money still owed and on which interest is based.
What is principal?
You are charged a finance charge on a credit card balance of $800. Her card has an APR of 18%. What will your finance charge be for 2 months.
What is $24?
I = $800 x .18 x 2/12 = $24
I = $800 x .015 x 2 = $24
A creditor’s right to take back an item you purchased on credit.
What is repossess?
Obtaining a court order to take all or part of a debtor’s check if he/she stops making payments.
What is garnishment?
One of the 3 C's - trustworthiness.
What is character?
What is length of credit history?
Both an advantage and disadvantage of using credit.
What is convenience? (Can help in an emergency, but can also be easy to misuse)