Ch 15 Vocab Flashcards
An arrangement to receive cash, goods, or services now and pay for them in the future
Credit
The use of credit for personal needs
Consumer credit
An entity that lends money
Creditor
Credit as a one-time loan that you will pay back over a specified period of time in payments of equal amounts
Closed-end credit
Credit as a loan with a certain limit on the amount of money you can borrow for a variety of goods and services
Open-end credit
The maximum amount of money a creditor will allow a credit user to borrow
Line of credit
A time period during which no finance charges will be added to your account
Grace period
The total dollar amount you pay to use credit
Finance charge
The income you receive (take-home pay, allowance, gifts, and interest)
Net income
The cost of credit on a yearly basis, expressed as a percentage
Annual percentage rate (APR)
A form of security to help guarantee that the creditor will be repaid
Collateral
The interest computed only on the principle (the amount that you borrow)
Simple interest
The smallest amount you can pay and remain a borrower in good standing
Minimum monthly payment
A measure of a person’s ability and willingness to make credit payments on time
Credit rating
Means that you agree to be responsible for the loan payments if the person fails to make them
Consigning
A legal process in which some or all of the assets of a debtor are distributed among the creditors because the debtor is unable to pay his or her debts
Bankruptcy
