Credit Test pt 2

  1. Definition of Credit?
    Amount of financial trust (principal) extended to you by a lender
  2. Definition of Loan Term?
    The length of time a loan lasts
  3. Definition of Interest?
    Payment (rent) you make for the use of another's money
  4. Definition of Finance Charge?
    The dollar cost for using credit
  5. Definition of Annual Fee?
    A once a year fee charged by many card issuers in addition to the interest charged on your purchase
  6. Definition of Annual Percentage Rate?
    Total Percentage it costs you yearly to use your credit
  7. Definition of Grace Period?
    A period of time allowed in which you can pay off new purchases, if there is no old balance awithout being charged interest
  8. Definition of Debt?
    Amount you owe with an obligation to pay back
  9. Definition of Credit Report?
    A historical record of a person's payment activity
  10. Definition of Bankruptcy?
    A legal process giving a person deeply in debt a plan to get out of that debt
  11. Definition of Consumer Credit?
    The use of credit for personal needs
  12. Definition of Closed end credit?
    A one -time loan that you will pay back over a specified period of time in payments of equal amounts
  13. Definition of Line of Credit?
    The maximum amount of money that a creditor makes available to a person
  14. Definition of Simple Interest?
    Computed only on the principal, which is the amount that you borrow
  15. Definition of Minimum Monthly Payment?
    The smallest amount you can pay on a credit card bill and remain a borrower in good standing
  16. Definition of Grace Period?
    The time period during which no finanace charges will be added to your account
  17. The longer the length of the loan, the less expensive it will be in terms of interest
  18. The higher the interest rate, the higher the cost of using credit
  19. When you use credit, compounding is working for you
  20. One benefit of credit is the ability to own an item now, instead of having to save up for it
Card Set
Credit Test pt 2
True and False/Vocab