Personal Finance 6.1/6.2 Vocab

Credit

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

Creditor

an entity that lends money

Open-end credit

credit as a loan with a certain limit on the amount of money you can borrow for a variety of goods and services

Closed-end credit

credit as a one time loan that you will pay back over a specified period of time in payments of equal amounts

Collateral

a form of security to help guarantee that the creditor will be repaid

Credit rating

a measure of a person's ability and willingness to make credit payments on time

Grace period

a time period during which no finance charges will be added to your account

Annual percentage rate

the cost of credit on a yearly basis expressed as a percentage

Net income

the income you recieve

Simple interest

the interest computed only on the principal

Line of credit

the maximum amount of money a creditor will allow a credit user to borrow

Minimum monthly payment

the smallest amount you can pay and remain a borrower in good standing

Finance charge

the total dollar amount you pay to use credit

Consumer credit

the use of credit for personal needs