Personal Finance Chapter 6 Vocabulary

Question 1

An arrangement to buy something now and agree to pay for it later.

Answer 1

Credit

Question 2

The use of credit for personal needs.

Answer 2

Consumer Credit

Question 3

A one-time loan that you will pay back over a specified period of time in payments of equal amounts.

Answer 3

Closed-End Credit

Question 4

The maximum amount of money that a creditor makes available to a borrower.

Answer 4

Line of Credit

Question 5

The total dollar amount you pay to use credit.

Answer 5

Finance Charge

Question 6

The rate at which credit costs you on a yearly basis, expressed as a percentage.

Answer 6

Annual Percentage Rate (APR)

Question 7

The legal process of making an arrangement to pay off your creditors.

Answer 7

Bankruptcy

Question 8

The smallest amount you can pay on a credit card bill and remain a borrower in good standing.

Answer 8

Minimum Monthly Payment

Question 9

When you agree to be responsible for loan payments if the borrower fails to make payments themselves.

Answer 9

Cosigning

Question 10

A time period during which no finance charges will be added to your account.

Answer 10

Grace Period