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55 Cards in this Set

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The privilegde of using someone else's money for a period of time.
credit
Anyone who buys on credit or receives a loan is
debtor
the one who sells on credit or makes a loan is
creditor
Means that the creditor believes that the debtor wil honor the promise to pay later for goods and services that have been received and used.
trust
means that the debtor promises to pay and the creditor trusts that the debtor will pay the amount that is owed
credit agreement
Borrowing money to be used later for some special purpose.
loan credit
credit offered at the time of sale
sales credit
Credit used when it receives goods from a wholesaler and pays them at a later specified date.
trade credit
2/10, n/30
2% discount if paid within 10 days;

the full net amount must be paid within 30 days.
businesses or individuals from whom you have received credit in the past and/or who can help verify you credit record.
credit references
the 3 C's
character, capacity, capital
A customer's honesty and willingness to pay a debt when it is due.
character
refers to your ability to pay a debt when it is due
capacity
the value of the borrower's possessions
capital
Some ways in which consumers benefit from their use of credit
convenience, immediate possession, savings, good credit rating, useful in an emergency
A person's reputation for paying debts on time.
credit rating
precautions for use of credit
overbuying, careless buying, higher prices, overuse of credit
3 types of accounts
regular, budget, and revolving account
A credit plan in which the seller or provider expects payment in full at the end of a specified period- usually a month
regular account
A credit plan requiring that payments of a certain fixed amount be made over several months.
budget account
A credit plan that allows purchases to be charged at any time but requires that at least part of the debt be paid each month.
revolving account
A credit plan that allows purchases to be charged at any time but requires that at least part of the debt be paid each month.
revolving account
The additional amount you must pay for using credit.
finance charge
How many % of the families in United States used one or more credit cards/
66%
Credit cards usage (4)
bank cards, Travel and Entertainment Cards, Oil company cards, retail store cards
A contract issued by the seller that requires periodic payments to be made at times specified in the agreement with finance chardes added to the cost of the purchase
Installment sales credit
a payment of part of the purchase price; it is usually made at the time of purchase
down payment
a loan in which you agree to make monthly payments in specific amounts over a period of time.
installment loan
A loan in which you do not pay anytihng until the end of the loan period, possibly 60 or 90 days.
single-payment loan
A written promise to repay based on a debtor's excellent credit rating.
promissary note
Property that is used as security.
collateral
A type of loan in which the lender has the right to sell property used as collateral to get back the amount of the loan in the event the loan is not repaid.
secured loan
Someone who becomes responsible for payment of the note if you do not pay as promised.
cosigner
3 things to know to determine the amount you have to pay
interest rate, principal, time factor
the percentage that is applied to your debt to which the interest rate is applied.
interest rates
amount of debt to which the interest rate is applied.
principal
the length of time for which interest will be charged
time factor
An expression of interest based on a one-year period of time.
simple interest
simple interest formula
I(interest)= P(principal)X R(rate)X T(time)
How many days are there in a year?
360
The date on which a loan must be repaid.
maturity date
The percentage cost of credit on a yearly basis.
Annual percentage rate (APR)
Special insurance that repay as the balance of the amount owed if the borrower dies or becomes disabled prior to the full settlement of the loan.
credit insurance
Means that you have established a credit record that shows you are a good credit risk.
creditworthy
A report that shows the debts you owe, how often you use credit, and whether you pay your debts on time.
credit record
An form on which you provide information needed by a lender to make a decision about granting credit or approving a loan.
credit application
Also known as a credit reporting agency, is a company that gathers information on credit users and sells that information in the form of credit reports to credit granters.
credit bureau
A record of the transactions that you have completed with a business during a billing period.
statement of account
A written record of the amount subtracted from your account when you return merchandise.
credit memorandum
A written form that acknowledges payments.
receipt
A law that requires that you be told the cost of credit purchase in writing before you sign a credit agreement.
Truth-in-Lending Law
The law that prohibits creditors from denying credit becasuse of age, race, sex, or marital status.
Equal Credit Opportunity Act
A law that requires prompt correction of billing mistakes when they are brought to the attention of a business in a prescribed manner.
Fair-Credit Billing Act
The law that gives consumers the right to know what specific information credit bureaus are providing to potential creditors, employers, and insurers.
Fair Credit Reporting Act
An agreement developed cooperatively by a creditor and a debtor to reduce payments to a more manageable level and still pay off the debt.
debt repayment plan