Personal finance Chapter 5
Open-end Credit
A line of credit in which loans are made on a continuous basis and the borrower is billed periodically for at least partial payment
Interest
A periodic charge for the use of credit
Revolving check credit
A prearranged loan form a bank for a specified amount; also called a bank line of credit
Collateral
A valuable asset that is pledged to ensure loan payments
Fair Credit Billing Act (FCBA)
Sets procedures for promptly correcting billing mistakes, refusing to make credit card payments on defective goods, and promptly crediting payments
Mobile commerce
The ability to purchase using a mobile device
Capital
The borrower's assets or net worth
Character
The borrower's attitude toward his or her credit obligation
Capacity
The borrower's financial ability to meet credit obligations
Line of credit
The dollar amount, which may or may not be borrowed, that a lender makes available to a borrower
Conditions
The general economic conditions that can affect a borrower's ability to repay a loan
Annual percentage rate (APR)
The percentage cost (or relative cost) of credit on a yearly basis. This yields a true rate of interest for comparisons with other sources of credit
Finance charge
The total dollar amount paid to use credit
Consumer Credit
The use of credit for personal needs (except a home mortgage)
Credit
An arrangement to receive cash, goods, or services now and pay for them in the future
Simple Interest
Interest computed on principal only and without compounding
Closed-end Credit
One-time loans that the borrower pays back in a specified period of time and in payments of equal amounts