Chapter 5: Consumer Credit: Advantages , Disadvantages, Sources, and Costs

What are some disadvantages of using credit ?

1)The temptation to overspend 2.)May lead to loss of valuable property

The float offered by many credit card issuers includes _______ of 20 to 25 days

A grace period

A line of credit is :

An open-end type of credit that the lender makes available to the borrower.

With ____-end credit, you pay back one-time loans in a specified period of time and in payments of equal amounts.

Close

A _____ end loan from the bank for personal purposes , home improvements , or vacation expenses is considered installment cash.

Closed

What is a trade-off for using credit?

Decrease in future available income

Credit

Is an arrangement to receive cash, goods, or services now and pay for them in the future.

Why is it not good to spend your entire monthly income on credit card bills?

It is not good if you have no money left for emergencies.

With ____-end credit, you pay loans back on a continuous basis and you are billed periodically for partial payments.

Open

If you decide to use credit , make sure the benefits of __________ now outweigh the costs of credit.

Purchase, shopping, buying, spending or usage

50-Day "Float"

Time lag between when you make a purchase and when the lender deducts the balance from your checking account when payment is due.

Credit is defined as an arrangement to receive cash , goods, or services now with the payment in the future: true or false?

True

Misuse of credit to purchase a home on credit (assuming you can't pay cash) can result in default bankruptcy, and loss of credit worthiness: true or false?

True

Purchasing Equipment on credit now is using credit now to pay later: True or false?

True

Consumer Credit

Use of credit card for personal needs (except home mortgage)