Financial Lit 2

Credit types

Revolving credit (reusable balance), installment credit (fixed payments), and open credit (paid in full monthly).

Credit terms

APR, principal, credit limit, minimum payment, and billing cycle.

Credit score factors

Payment history, amounts owed, credit length, new credit, and credit mix.

Interest and fees

Costs added to borrowing, including APR, late fees, annual fees, and transfer fees.

Payment history

Record of on-time or late payments; the largest part of your credit score.

Co-signing

Sharing responsibility for a loan; both people's credit is affected by missed payments.

Installment credit

Loans with fixed payments over a set period, like auto or student loans.

Revolving credit

Credit that can be used repeatedly up to a limit, like credit cards.

Down payments

Upfront amount paid to reduce loan principal and lower monthly payments.

Principal

The original amount borrowed before interest is added.

Simple interest

Interest charged only on the principal amount.

Compound interest

Interest charged on principal plus previously earned interest.

Mortgage planning

Choosing loan terms, rates, and payments based on long-term financial goals.

Default consequences

Damage to credit, collections, repossession, or foreclosure.

Investment plans

Strategies based on goals, time horizon, and risk tolerance.

Investment types

Stocks, bonds, ETFs, mutual funds, real estate, and retirement accounts.

Compound growth

Growth where earnings generate additional earnings over time.

Rule of 72

A formula estimating how long it takes money to double: 72 ÷ interest rate.

Robo-advisors

Automated platforms that manage investments using algorithms.

Micro-investing

Investing small amounts regularly, often through apps.

FINRA

A regulatory agency that oversees brokers and protects investors.

Insurance policy types

Auto, health, life, renters, and homeowners insurance.

Coverage

The protection an insurance policy provides against financial loss.

Premiums

Regular payments required to maintain insurance coverage.

Deductibles

The amount paid out-of-pocket before insurance begins covering costs.

Coinsurance

A percentage of costs shared between you and the insurer after the deductible.

Comparing providers

Evaluating premiums, deductibles, coverage limits, and customer service.

Insurance planning

Choosing coverage to protect against financial risks.

Consumer protections

Laws ensuring fair treatment, accurate information, and safe financial practices.

Consumer responsibilities

Reading contracts, paying bills, monitoring accounts, and reporting issues.

False advertising

Misleading claims used to deceive consumers.

Fraud

Intentional deception for financial gain, including scams and identity theft.

Identity theft prevention

Protecting personal info through strong passwords, monitoring, and safe habits.

Digital footprints

The trail of data created by online activity.

Scams

Fraudulent schemes using urgency, fake offers, or requests for personal information.