Final Exam Review Flashcards
Credit
Is the ability to borrow money with the promise that you’ll repay it later. You may use credit to pay for things you can’t pay for immediately, like small loans from day-to-day.
Debt
The money you’ve already borrowed but haven’t paid back yet. If you don’t pay off all the debt you owe on your account, you’ll usually be charged interest, which is the cost of borrowing money.
Credit Cards
Borrowing money that is accompanied by interest and sometime fees. The average interest rate for a credit card is between 19.99% to 23.99% APR.
Debit Cards
Money you have immediate access to in your bank account
Credit Report
A document which lists a borrower’s credit history, by using lenders to determine risk levels with issuing credit.
Credit Score
-Is a three digit number that comes from the information in your credit report. it shows how well you manage credit and how risky it would be for a lender to lend you money.
TDSR/GDSR
Is the percentage of the total annual mortgage
Principle+Interest+Taxes+Utilities/Gross Annual Income
TDSR- Is the percentage of gross annual income required to cover all other debts and loans in addition to the cost of servicing the property and the mortgage.
Interest Rate
is the cost of borrowing money or the reward for saving money, expressed as a percentage of the amount borrowed or saved over a specific period.
Credit card Statement
a document showing all of your acitivty within a billing cylce. A billing statement is provided once a month
Revolving Credit
you have a credit limit that you can’t exceed when using the account for purchases.
Installment Credit
is a loan for a specific amount of money, including interest and fees that you repay in fixed, regular payments (instalments) for a specific number of months.
Ex)auto loans, mortgages, student loans
Consolidation
refers to taking out a new loan or credit card to pay off other existing loans or credit cards. By combining multiple debts into a single, larger loan, you may also be able to get more favourable pay off terms, such as lower interest rates, lower monthly payments, or both.
Bankruptcy
A legal process performed under the bankruptcy and Insolvency Act to help a person cope with a financial crisis.
Cosigner
Someone who signs on a loan and will take responsibility if the primer borrower does not pay. It also impacts your credit score and financial opportunities for several years.
Trustee
Someone assigned to manage your bankruptcy or consumer proposal under the bankruptcy and insolvency act to manage assets held in trust.
Principle amount
The amount being borrowed
Debtor
Perso going into debt by borrowing money
Consumer proposal
A legal procedure that stops creditors from taking legal actions against people in debt.
Taxes
Is money that individuals and businesses pay to the government. The government uses this money to provide public services and country benefits
Income tax
Is money that individuals and businesses pay to the government based on the income they earn. If you are under 18 and make less than $15,705b per tax year, that’s when you will receive a partial refund on the tax you paid.
Sales tax
is a percentage-based fee added to the price of goods or services you purchase. It is collected by the seller and paid to the government.
Property tax
is a tax you pay to the local government based on the value of the property you own, such as your home, land, or other real estate.
Liability
Owing money, like a loan or credit card debt.
Asset
is anything valuable that a person, business, or organization owns
Customs and Duties
the tax put on goods when they are transported across international borders
Tariff (s)
tax on goods and services imported into a country, typically to increase the price of imported goods, making them more expensive than in country goods.
T4 Statement
is a summary of your employment earnings and deductions for the year.
Includes: tax year, employer’s name + address, your SIN
Pay stub
is a document that summarizes an employee’s pay information for a specific pay period.
Gross pay
The amount of income you earn before any deductions.
Net pay (take home pay)
The amount of income you earn after tax deductions.
Summer student position
Usually full-time and scheduled Mon-Fri. This is good for collage and uni students, allowing them to work during the summer months starting in May and ending at the end of August.
Seasonal Employment
Is a temporary worker who is hired to meet a business’s staffing needs during peek periods, such as holidays, high seasons, and other busy times. Usually paid similarly to a part-time worker.
Ex: Camp counsler, server, retail, lifeguard
Casual Employment
Unreliable, occasional, and unpredictable.
Ex: Security, referee, babysitter, personal assistant.
Part-time employment
-Working fewer hours compared to a full-time job and not as constant.
-20 hours/week or less
Ex: Cashier, waiter, stockroom worker
Full-time employment
Requires 32-40 hours per week. Constant schedule.
ex: Teacher, mechanic, police officer.
Salary
Getting paid a set amount no matter what you do.
Wage
Earning an income based on the hours you have worked, usually an hourly rate is $15/h.
Contract income
is money you earn by providing services or completing tasks based on a contract. Instead of being a regular employee, you’re paid specifically for the work you agreed to do.
Cash advances
is like borrowing money from a future paycheck or another form of income. It’s a way to get quick access to cash when you need it urgently. However, it’s typically more expensive than other types of loans because of higher fees and interest rates.
Balance Transfers
is when you move debt from one credit card (or loan) to another, usually to take advantage of lower interest rates. It’s like shifting your debt to a new home with cheaper rent.
Down payment
Is a sum a buyer pays upfront when purchasing an expensive good such as a home or car. It’s usually a percentage of the total cost, and the rest is covered by a loan or financing.
The 5 C’s of Credit
- Character: refers to credit history (credit score).
- Capacity: measures the borrowers ability to repay a loan by comparing the borrowers debt-to-income ratio.
- Capital: the amount of money you have available to you.
- Collateral: can help a borrower secure loans.
- Conditions: lenders look at the general conditions relating to the loan. May include the length of time that an applicant has been employed at their current job, how their industry is performing, and job stability.
Creditor
Is a person or business someone borrows money from.
