NGPF Unit Review: Managing Credit - Vocabulary Flashcards

Vocabulary flashcards covering core concepts from the Managing Credit unit.

Net Worth

Assets minus liabilities; a measure of wealth. Includes assets like investments, homes, and other valuable items.

Asset

Something of value you own that can provide future benefits (cash, investments, property).

Liability

A debt or obligation owed to another party.

Credit Card

A revolving line of credit that allows purchases up to a credit limit; requires payments and may accrue interest if not paid in full; disclosures appear in a Schumer Box.

Debit Card

A payment card that draws money directly from your checking account; does not involve borrowing.

Prepaid Debit Card

A card pre-loaded with a fixed amount of money; spending is limited to the preloaded balance.

Installment Loan

A loan repaid in regular, fixed payments over time.

Secured Debt

Debt backed by collateral (an asset) that the lender can seize if you default.

Unsecured Debt

Debt not backed by collateral; typically higher risk to lenders and may have higher interest.

Fixed-Rate Loan

A loan with an interest rate that stays the same over the term.

Variable-Rate Loan

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

Adjustable-Rate Mortgage

A mortgage with an interest rate that can change after an initial fixed period, causing payments to vary.

Mortgage

A loan used to purchase real estate; typically secured by the property.

Auto Loan

Installment loan used to purchase a vehicle; usually secured by the vehicle.

Down Payment

Upfront money paid to reduce the loan amount.

Principal

The original amount borrowed, excluding interest.

Interest

The cost of borrowing, expressed as a percentage of the principal.

APR

Annual Percentage Rate; the yearly cost of credit including interest and most fees.

Amortization

The process of paying off a debt over time with scheduled payments that include principal and interest.

Amortization Schedule

A table showing each payment’s breakdown of principal and interest and the remaining balance over time.

Grace Period

A period after purchase during which interest is not charged if you pay in full (commonly on credit cards).

Minimum Payment

The smallest monthly payment required to keep the account in good standing; paying only this can extend debt and cost more interest.

Credit Report

A record of your credit history maintained by credit bureaus; lenders review it to assess risk.

Credit Score

A 3-digit number (typically 300–850) representing creditworthiness; influenced by payment history, amounts owed, length of history, credit mix, and new credit.

Credit Bureau

An organization (Experian, Equifax, TransUnion) that collects and distributes credit information.

Hard Inquiry

A credit check that can affect your credit score and is visible to lenders.

Soft Inquiry

A credit check that does not affect your credit score and is usually not visible to lenders.

Authorized User

Someone added to a credit card account who can make purchases and help build credit if managed responsibly.

Cosigner

A person who signs for a loan to share responsibility if the borrower cannot repay; helps qualify for credit.

Collateral

An asset pledged to secure a loan; lender can seize it if you default.

Secured Credit Card

A credit card that requires a security deposit and typically has a credit limit tied to the deposit.

Payday Loan

A short-term, high-interest loan due by the next paycheck; carries a high cost and risk of debt cycle.