Studied by 6 people
Annual Fee
yearly charge for having a credit card
APR
total cost of credit for one year, expressed as a percentage. APR includes interest and other fees associated with the loan
Credit Limit/Line
maximum amount of credit extended to you by bank or credit card issuer
Finance Charge
total dollar amount you must pay for the credit card you use. Charges may include interest and other fees (loan application fee)
Grace Period
period of time during which you are not charged interest on new purchases (if you have no outstanding balance)
Interest
the price of using credit
Interest Rate
the price of using credit expressed as a percentage of the amount owed
Late Fee
a penalty, in addition to interest that is charged if payment is received after the due date
Minimum Payment
the lowest amount you must pay toward your credit balance each month
Pros of using credit
1. Consumer Protection
2. Benefits and Rewards
Cons of using credit
1. Overspending
2. High interest rates
Credit Score
Numeric summary of your credit history
poor vs excellent credit score
300 (poor) - 850 (excellent)
How does your credit score go up?
On-time payments
hy does your credit score go down?
Number of open accounts (too much credit)
Why is good/excellent credit necessary?
access to more options, lower interest rates, and more lender choices.
What criteria is used in determining one’s credit score?
On-time payments
Credit use vs credit limits (credit utilization)
Long credit history
Credit mix
Timing of new credit
Number of open accounts (too much credit)
Causes of Credit Card Debt
Bad spending
Bad payments
How to Avoid Credit Card Debt
Pay your balance full this month
Different Types of Rewards
benefits such as rewards, cash back, travel points, etc
Secured loan
the Borrower puts up collateral as a promise the loan will be repaid
Unsecured loan
no collateral needed for loan
Note
Flashcard