Untitled Flashcard Set

Credit Card

A plastic card issued by a financial institution allowing consumers to borrow funds up to a limit for goods and services.

Rewards Credit Cards

Credit cards that offer points, miles, or cash back on purchases.

Secured Credit Cards

Credit cards that require a cash deposit as collateral, often used for building or rebuilding credit.

APR (Annual Percentage Rate)

The annual rate charged for borrowing or earned by investing, expressed as a single percentage number.

Balance Transfer

The process of moving debt from one credit card account to another, often to a card with a lower introductory APR.

Rent to Own

An agreement where you rent a property with the option to buy it before the lease expires.

Installment Agreements

Loans repaid over time with a fixed number of scheduled payments, which include principal and interest.

Layaway

A purchasing agreement where an item is set aside for a customer, who makes payments over time.

Loss Aversion

A cognitive bias where the pain of losing something is more powerful than the pleasure of gaining an equivalent.

Endowment Effect

A cognitive bias where individuals ascribe more value to things they own than to equivalent unowned items.

Anchoring Bias

A cognitive bias where decisions are heavily influenced by an initial piece of information.

Present Bias

The tendency to overvalue immediate rewards and undervalue future rewards.

SMART Goals

A framework for setting goals that are Specific, Measurable, Achievable, Relevant, and Time-bound.

Payday Loans

Short-term, high-interest loans designed to be repaid on the borrower's next payday.

Debt to Income Ratio (DTI)

A financial metric comparing an individual's total monthly debt payments to their gross monthly income.

Revolving Credit

A type of credit that allows you to borrow up to a limit, pay back, and borrow again without a fixed end date.

Unsecured Loans

Loans not backed by collateral, relying on the borrower's creditworthiness and promise to repay.

Secured Loans

Loans backed by collateral, allowing the lender to seize the collateral if the borrower defaults.

Fixed Interest Rate

An interest rate that remains the same throughout the duration of the loan.

Debt Consolidation

Combining multiple debts into a single, larger loan for simplified payments and potentially lower interest.

Bankruptcy

A legal process for individuals or businesses who cannot repay their debts, providing a fresh start but damaging credit.

Amortization Schedule

A table showing each periodic payment details on an amortizing loan, including how much goes to principal and interest.