Credit- Consumer Management

credit

the ability of a customer to obtain goods or services before payment, based on the trust that payment will be made in the future.

revolving credit

Credit that allows the consumer to borrow up to a specific limit

installment credit

a one time loan repaid with interest in equal periodic payments

What is an example of revolving credit?

Bank credit card, retail credit cards

What is an example of installment credit?

automobile loan, mortgage loan

Which type of credit card can be used almost anywhere?

Bank Credit Card

Interest

a fee charged for the use of money

Credit line/limit

the maximum amount that a person can borrow on a credit account

Annual Percentage Rate (APR)

The interest rate charged to the cardholder on the amount borrowed

Grace Period

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

Annual Fee

A yearly fee that may be charged for having a credit card

due date

The date on which a payment is due

Late payment fee

Fee charged when a credit card holder does not make the minimum monthly payment by the due date

Minimum Payment

The smallest required payment that a credit card holder can pay on a monthly bill. BUT YOU WILL NEVER DO.

Credit card interest rates are:

High

What are some pros of credit cards?

Rewards, build credit, emergencies, hotel reservations, etc.

What are some cons of credit cards?

Easy to overspend, high interest rates, hacking etc.

Schumer Box

Terms and fees of a credit card in an easy to read box on all credit card applications and solicitations

Default

failure to pay back a loan

Bankruptcy

A legal process to get out of debt when you can no longer make all your required payments

What are some ways to build credit young?

Apply for a store credit card, become an authorized user, get a cosigner

Why is it important to have a good credit score?

Saves money on loans, better interest rates

What are the three C's of credit?

character, capital, capacity

Dependents

a person who relies on another, especially a family member, for financial support.

What are the three credit reporting agencies?

Equifax, Experian, TransUnion

What does your credit score range from?

300-850

What factor impacts your credit score the most?

payment history

What are ways to save money on a mortgage?

Have a good credit score, pay off your bill every month, choose a 15 year loan, put a big down payment down

Cosigner

Someone who promises to pay if the borrower fails to pay

Authorized User

able to use the credit card account but is not legally liable for the balance due on the account

joint account holder

equally responsible for the balance of the account along with the other person named on the account and is legally liable for any amount due