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Pers. Finance > Chapter 16 & 17 > Flashcards

Chapter 16 & 17 Flashcards

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1
Q

One of the earliest forms of credit at the local general store

A

Account

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2
Q

The free period which allows you to avoid a finance charge if you pay in full before the due date

A

Grace period

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3
Q

One who lends money or the use of goods and services for payment at a later date

A

Creditor

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4
Q

Paying at a future date for the present use of goods and services or money

A

Credit

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5
Q

A pre-established amount that can be borrowed on demand

A

Line of credit

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6
Q

A loan on which the goods purchased with the loan serve as __________ is a type of secured loan

A

Collateral

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7
Q

Credit whereby you can add purchases up to a set credit limit

A

Open-end credit

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8
Q

A loan for a specific amount that must be repaid in full, including finance charges, by a stated due date

A

Closed-end credit

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9
Q

Money borrowed against the credit card limit

A

Cash advance

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10
Q

A manufacturer-related company that makes loans through authorized representatives

A

Sales finance company

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11
Q

Unlicensed leaders who charge illegal interest rates

A

Loan sharks

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12
Q

A service to customers that allows you to charge now and not be billed for several months

A

Deferred billing

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13
Q

The interest you pay for the use of credit

A

Finance charge

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14
Q

almost everyone uses this, involves having work performed and paying for it later

A

Service

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15
Q

Businesses that offer goods and services directly to customers and include department stores, drugstores, and clothing stores

A

Retail

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16
Q

Small loan companies that charge higher interest rates and take more risk

A

Finance companies

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17
Q

Maximum interest rates are set by these laws in some states

A

Usury

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18
Q

A legal business where loans are made based on the value of merchandise used as a collateral

A

Pawnbroker

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19
Q

Something of value that can be sold to pay a debt

A

Collateral

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20
Q

T or F? Most disadvantages of credit can be eliminated by wise use of credit.

A

True

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21
Q

T or F? Department stores, drug stores, and finance companies are all examples of retail outlets.

A

False

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22
Q

T or F? Interest rates on loans are usually higher at credit unions than they are at banks.

A

False

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23
Q

T or F? Where no usury laws exist, financial institutions may charge whatever rate of interest is agreed upon.

A

true

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24
Q

T or F? In an installment purchase agreement, the item you are purchasing will serve as the collateral.

A

true

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25
Q

T or F? Affinity cards charge higher interest rates than regular bank credit cards.

A

false

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26
Q

T or F? Credit has helped the American economy to grow at a healthy pace.

A

True

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27
Q

T or F? a line of credit is a pre-established amount you can borrow without a new loan application.

A

True

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28
Q

T or F? The Truth-in-Lending law requires all lenders to calculate APR the same way.

A

True

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29
Q

T or F? A debtor is a person who borrows money from others.

A

True

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30
Q

Credit cards such as VISA and MasterCard are examples of what?

A

Revolving credit agreements

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31
Q

What is an example of service credit?

A

Telephone bill

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32
Q

Why do finance companies charge higher rates of interest on loans?

A

They take more risk

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33
Q

Pawnbrokers sell merchandise you have pawned, called ________, if you do not repay the loan plus interest by a specified date.

A

Collateral

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34
Q

What is true about an installment purchase agreeement?

A

New purchases may not be added on.

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35
Q

What is GMAC Financial Services an example of?

A

Sales finance company

36
Q

In determining your ____________ or overall ability to handle credit, a creditor will ask about your past credit performance.

A

Creditworthiness

37
Q

A responsible attitude toward paying bills meeting obligations on time

A

Character

38
Q

This will answer questions about how you have paid your bills, how many bills you have had and what type, how much total credit you have been given, and how much credit appears to be outstanding now.

A

Credit history

39
Q

A credit bureau issues this written statement which itemizes accumulated information about a person through subscribers and public records.

A

Credit report

40
Q

A member of the credit bureau that pays fees for use of the bureau’s services in collecting information and issuing reports.

A

Subscriber

41
Q

These scores are the credit scores many lenders use to determine credit risk.

A

FICO

42
Q

The ability to repay a loan or make payments on a debt out of current income.

A

Capacity

43
Q

Existing debts, stability of employment, and personal factors that determine a person’s ability to meet financial obligations

A

Conditions

44
Q

A business that accumulates, stores, and distributes credit information to members.

A

Credit bureau

45
Q

A type of rating used by credit bureaus in determining a person’s general creditworthiness.

A

Point system

46
Q

An ___________ credit rating is earned when you pay your bills before the due date.

A

Excellent

47
Q

A _______ credit rating is earned when you pay your bills on the due date or within a short grace period.

A

Good

48
Q

A _______ credit rating is likely to result in denial of new credit.

A

Poor

49
Q

A _______ credit rating is given to a person who pays during the grace period, but occasionally takes longer.

A

Fair

50
Q

A person hired to collect the balance due.

A

Debt collector

51
Q

The act of treating people differently based on prejudice rather than individual merit.

A

Discrimination

52
Q

T or f? Your credit history is an important record of your past experiences with credit, and you have rights and responsibilities for its accuracy.

A

True

53
Q

T or f? A credit bureau is a nonprofit company established by members for the benefit of members

A

False

54
Q

T or f? Most large credit bureaus are computerized clearing houses that search for and retrieve information to make reports.

A

True

55
Q

T or f? If you are denied credit based on a credit report, inaccurate information in your file may be the cause.

A

True

56
Q

T or f? A debt collector is allowed to make phone calls at any time in order to collect overdue balances

A

False

57
Q

T or f?the Consumer Credit Protection Act prevents discrimination in the judgment of credit worthiness

A

False

58
Q

T or f? Information gathered for credit reports may come from credit applications when you apply for credit

A

True

59
Q

T or f? A point system of credit rating is based on assigning value to such things as employment, amount of income, amount of current debt, or number of late payments.

A

True

60
Q

T or f? An excellent credit rating results when you pay your bills on the due date every month and never miss a payment

A

False

61
Q

T or f? A person who is considered a good credit risk usually meets five basic qualifications, called the 5 Cs of credit

A

True

62
Q

T or f?it is lawful for creditors to ask you for personal information such as employment and residence history, in order to determine your credit worthiness

A

True

63
Q

T or f?if you believe your bill contains an error, there usually is no hurry in resolving the problem

A

False

64
Q

What is an unlawful purpose for a credit report?

A

Mailing list information

65
Q

Which act provides that you may see your credit file at no charge within 30 days of a credit denial?

A

Fair Credit Reporting Act

66
Q

If you believe there is an error in your statement, your complaint must be in writing and mailed within _____ days after you receive the statement.

A

60

67
Q

Your letter of complaint must be acknowledged in _____days

A

30

68
Q

The creditor must either correct the error or explain why the bill is corrects within _____ days of receiving your complaint

A

90

69
Q

What are the 5 Cs of credit?

A

Character, capacity, capital, conditions, collateral

70
Q

The Truth-in-Lending Act limits your liability when a credit card is lost or stolen to the first ______ unless the card is reported lost or stolen before it can be used

A

$50

71
Q

To pay your bills on the due date or soon after is to earn a _______ credit rating

A

Good

72
Q

Who are credit reports issued by?

A

Credit bureaus

73
Q

How often are credit files updated by computers and search procedures?

A

Daily

74
Q

What is a good first step in getting started with credit?

A

Opening a savings account

75
Q

What is the Act known for its provisions requiring full disclosure of all costs in a credit transaction?

A

Truth-in-Lending Act

76
Q

The see your credit file at any time would cost you……..

A

A small charge

77
Q

In many cases, people with poor credit ratings have…….

A

Missed monthly payments, failed to pay back debts, and filed for bankruptcy

78
Q

What are debt collectors required to do?

A

Give consumers the chance to clarify and dispute their bills

79
Q

What are 4 things included on your credit report?

A

Marriage or divorce, bankruptcy, if you’re being sued, and credit history

80
Q

A law where you invest and they have to tell you the full cost of credit before you sign

A

Consumer Credit Protection Act or Truth-in-Lending Law

81
Q

You have the right to see your credit report once every year UNLESS you are denied credit

A

Fair Credit Reporting Act

82
Q

They cannot deny you credit based on anything BUT your credit worthiness

A

Equal Credit Opportunity Act

83
Q

Debt collectors can’t harass you to a certain extent (can come and take your car)

A

Fair Debt Collection Practices Act

84
Q

What are a few advantages of consumer credit?

A

Convenience, emergency funds, safety, and purchasing power

85
Q

What are a few disadvantages of credit?

A

Higher prices, finance charges, tie up income, and overspending

Pers. Finance (2 decks)

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