Unit 2

Consumer

any person or group that buys or uses goods and services to satisfy personal needs and
wants

Disposable Income

income remaining for a person to spend or save after all taxes have been paid.

Discretionary Income

money income a person has left to spend on extras after necessities have been
bought

Competitive Advertising

advertising that attempts to persuade consumers that a product is different from and superior to any other

Informative Advertising

advertising that benefits consumers by giving information about a product

Bait and Switch

advertising that attracts consumers with a low-priced product, then tries to sell them a higher-priced product

Comparison Shopping

getting information on the types and prices of products available from different stores and companies

Consumerism

the movement to educate buyers about the purchases they make and to demand better and safer products from manufacturers

Ethical Behavior

acting in accordance with moral and ethical convictions about right and wrong

Credit

receipt of money either directly or indirectly to buy goods and services in the present with the promise to pay for them in the future.

Principal

amount of money originally borrowed

Interest

amount of money the borrower must pay for the use of someone else's money

installment debt

type of loan repaid with equal payments, or installments, over a specific period of time

Durable goods

manufactured products that last over three years.

Charge Account

credit extended to a consumer allowing the consumer to by goods or services from a particular company and to pay for them later

Finance Charge

cost of credit expressed monthly in dollars and cents

Annual Percentage Rate (APR)

cost of credit expressed as a yearly percentage

credit bureau

a private business that investigates a person to determine the risk involved in lending money to that person

Credit Check

investigation of a person's income, current debts, personal life, and past history borrowing and repaying debts

credit rating

rating of the risk involved in lending money to a specific person or business

Usury Law

law restricting the amount of interest that can be charged for credit

Club warehouse store

store that carries a limited number of brands and items in large quantities and is less expensive than supermarkets.

convience store

a store open 16 to 24 hours a day, carrying a limited selection of relatively higher-priced items.

Durablility

ability of an item to last a long time

Service Flow

amount of use a person gets from an item over time and the value, a person places on this use

Closing Costs

fees involved in arranging for a mortgage or in transferring ownership of property

Points

fees paid to a lender and computed as a percentage
of a loan

standard fixed-rate mortgage

(home loan) the Interest rate and monthly payments remain the same over the term of the mortgage- usually 15 to 30 years.

Flexible rate mortgage

A mortgage with an interest rate that fluctuates according to changes in an index to which it is connected. Also called variable-rate mortgage.

Federal Housing Administration Mortgage

The FHA will insure the entire amount of its mortgages.

Graduated Payment Mortgage

Interest rate is usually fixed for the life of the mortgage; interest rates are small at first and increase over time

Veterans Administration Mortgage

A mortgage that veterans are guaranteed to qualify for; smaller interest rates than others

Lease

a long-term agreement describing the terms under which property is rented

Security Deposit

money a renter lets an owner hold in case the rent is not paid or an apartment is damaged.

Registration Fee

licensing fee, usually annual, paid to a state for the right to use a car

Liability Insurance

insurance that pays for bodily injury and property damage

Saving

setting aside income for a period of time so that it can be used later

Statement Savings Account

account similar to passbook savings except that the depositor receives a monthly statement showing all transactions

Money Market Deposit Account

an account that pays relatively high rates of interest, requires a minimum balance and allows immediate access to money

Time Deposits

savings plans that require savers to leave their money on deposit for certain periods of time

Certificates of deposits

time deposits that state the amount of the deposit, maturity, and rate of interest being paid

Stockholders

people who have invested in a corporation and own some of its stock

Broker

a person who acts as a go-between for buyers and
sellers of stocks and bonds