Chapter Four Flashcards
Debt:
money owed to another person or company
____ is the most aggressively marketed product ever.
debt
Visa, Mastercard, Discover, and American Express spend over $4 billion a year on ______ alone.
marketing
There were no credit cards prior to ____
1958
Once you turn 18 you become a large target for credit card marketing, because
people are often very loyal to their first credit card.
Credit card tactics to look out for:
offering a low or zero interest introductory rate, requiring only the minimum monthly payment, and offering cash back and other rewards.
Secured Credit:
is when you have to put down a security deposit or use something as collateral.
Unsecured Credit
is when the lender doesn’t require you to put down a security deposit or collateral.
Revolving credit:
credit that automatically renews whenever a payment is made to reduce the debt
Collateral:
something owned offered as security on a debt; if the debt is not repaid as agreed, the item is forfeited to the lender.
Lien:
a legal claim against an asset until the debut is repaid
Appreciating Asset
an asset that increases in value over time
Equity:
the increase in value of a home over time; the difference between the amount owed and what the home could be sold for.
Default:
failure to repay a loan on time
Installment credit
a loan for a fixed amount of money that’s paid back in monthly installments.
Depreciating Asset
an asset that loses value over time, such as a car that’s worth less every year.
Predatory lender:
a lender who uses deceptive, unfair, or fraudulent practices on borrowers who are desperate for cash.
___ of Americans have a credit card
80%
T/F: Personal loans often come with higher interest rates
True
Credit Score:
a statistical number used to represent a consumer’s creditworthiness.
Credit Bureau:
a company that collects credit rating information and makes it available to creditors.
Seven common credit card fees:
annual fee, balance transfer fee, cash advance fee, finance charge, late payment fee, over-limit fee, and returned payment fee
The average college student’s credit card debt is $____
1400
Principal:
the original amount of a loan; the total amount borrowed before interest.
Interest:
the additional cost a lender chargers for borrowing their money.
Term:
the amount of time, in months, that you’ll be making payments.
Depreciation:
the loss of value of an asset over time.
Negative equity
when the value of an asset falls below what is owed on it.
