NGPF Unit Review: Types of Credit

These flashcards cover the core vocabulary related to credit types, loans, and personal finance concepts discussed in the NGPF Unit Review.

Types of Credit

The different classifications of credit including revolving, installment, and open credit.

Principal

The amount of money borrowed from a lender.

Interest Rate

The percentage charged on a loan or paid on savings, expressed as an annual percentage.

Term

The duration over which a loan must be repaid.

Revolving Credit

A type of credit that allows consumers to borrow up to a certain limit and pay it back over time.

Installment Loan

A loan that is repaid over time with a set number of scheduled payments.

Grace Period

The period during which a borrower can pay off a debt without facing a penalty.

Amortization

The process of systematically paying off a debt in regular installments.

Fixed-Rate Loan

A loan with an interest rate that remains the same throughout the term of the loan.

Variable-Rate Loan

A loan with an interest rate that can change based on market conditions.

Secured Debt

A debt backed by collateral to reduce the risk associated with lending.

Unsecured Debt

A debt that is not backed by collateral.

Minimum Payment

The lowest amount that a borrower is required to pay on a credit card bill each month.

Credit Limit

The maximum amount of credit that a financial institution extends to a client.

Down Payment

An initial payment made when something is bought on credit.

Payday Loan

A short-term loan that is typically due on the borrower's next payday, often with high fees.

Schumer Box

A table that outlines the terms and fees associated with a credit card.

Credit Score

A numerical representation of a borrower's creditworthiness.

Peer-To-Peer Lending

A method of borrowing and lending money without the involvement of an official financial institution.

Auto Loan

A loan specifically for purchasing a vehicle, generally requiring collateral.

Mortgage

A loan used to purchase real estate, where the property is used as collateral.