Chapter 18 Flashcards
finance charge
total dollar cost of credit including interest and other charges
credit
privilege of using someone elses money for a period of time
charge cards
ex: american express and diners club (once called travel and entertainment cards) ā subscribers pay a yearly membership fee, pay balance each month, no spending fee
affinity cards
co branded with an issuing bank, allow an organization to receive small percent of credit sales
installment credit
contract issues by the seller that requires periodic payments at specific times
installment loan
one in which you agree to make monthly payments in specific amounts over a period of time
promissory note
written promise to repay based on a debtors excellent credit history
date of maturity
date on which the note is due
principal
the amount that is promised to be paid
credit rating
a persons reputation for paying bills on time
benefits of credit
convenience, immediate possession, savings, credit rating, useful for emergencies
credit concerns
overbuying, careless buying, higher prices, overuse of credit
Interest
interest= principal X rate X time
amount of loan, percent of interest charged or earned, time for which interest will be charged
APR
annual percentage rate, states the percentage cost of credit on a yearly basis
three cās of credit
capacity, character,
capital
