Chapter 5 Flashcards
Amount you are borrowing
Principle
Percentage (usually per year) charged to borrow
Interest
The amount of time of investment, agreement, ect.
Term
Requires collateral - lender can take it if you don’t pay, safer for the lender and offers lower interest rate.
Secured
used to finance a specific amount of time. Regular payment made to payments are made to pay the interest and the principle.
Installment loans
an open line of credit that can be used for any purchases as long as you’re under the credit limit.
Revolving credit
debt is tied to a specific asset that can be used as collateral and repossessed if the borrower doesn’t make payments.
Secured debt
interest rate can change during the duration of the loan based on the prime rate or an index rate.
Variable- Rate
debt is not tied to a specific asset; there is no collateral that can be repossessed if borrower defaults.
Unsecured Debt
interest rate remains constant during the duration of the loan.
Fixed - Rate
Amount of money you can borrow to pay back later.
Line of Credit
The amount you still owe after have made your most recent payment.
Outstanding balance
Federal student loans will default to the standard plan, Which has a term of ____ years
10
initial payment made to the creditor that lowers your total debt
Down payment
what is the typical grace period for a credit card in days
20 - 30
Federal student loan that the government pays interest on while you are enrolled as a full-time student
Subsidized
This financial item, tied to your checking account, WILL NOT help build your credit score.
Debit Card
A person added to a credit card account by the primary cardholder
Authorized user
which transaction types DECREASES how much you owe the credit card company.
Payment
Grace Period for student loans, in months.
6
When loans are amortized, monthly payments are:
Constant
someone who agrees to take on the responsibility of repayment if the loan goes unpaid.
Cosigner
When loans are amortized, the interest portion of the monthly payment ______ over time.
decreases
When loans are amortized, the principle portion of the monthly payment _____ over time.
Increases
The shorter your term length, the (higher/lower) your monthly payments.
higher
The shorter your term length, the (higher/lower) the total interest you will pay.
lower
What is required to be considered “up to date” with your credit card.
minimum payment
gradually write off the initial cost of (an asset) over a period.
Amortized
