Unit 4 Key Terms
Secured Loan
A loan that is protected by Collateral
Fixed Rate Loan
A loan with a rate that does not change over the life of the loan.
Grace Period
A time period during which no finance charges will be added to your account
Amortization
Refers to how loan payments are applied to certain types of loans
Loan
Borrowed money with an agreement to repay it with interest with a certain amount of time
Credit
It is an arrangement to receive cash, goods, or services now and pay for them in the future
Creditor
It is an entity, a financial institution, merchant, or individual, that lends money
Closed-End Credit
It is credit as a one time loan that you will pay back over a specified period of time in payments of equal amounts.
Unsecured Loan
Loan that is not protected by Collateral
Collateral
Something valuable that the lender can take as repayment if you default on your loan and can't pay it back
Schumer Box
Table that summarizes the costs associated with a credit card
Credit Limit
The maximum amount of money a creditor will allow a credit user to borrow
FICO Score
The most commonly used credit scoring system
Finance Charge
Total dollar amount you pay to use credit
Cash Advance
allows you to use your credit card to get a short-term cash loan at a bank or ATM. Think of it as using your credit card to "buy" cash rather than goods or services.
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
Credit Score
number that reflects your financial trustworthiness based on your credit report
Property Lien
A legal claim on assets that allows the holder to obtain access to property if debts are not paid
Credit Bureau
An agency that collects, organizes, and disseminates credit information to creditors and potential creditors
Cosigner
If you wipe out on your loan, he/she is one responsible for its repayment
Consumer Credit
Use of credit for personal needs
Annual Fee
a fee that you're required to pay every year to remain a cardholder and enjoy the card's rewards and benefits
Variable Rate Loan
a loan in which the interest rate charged on the outstanding balance varies as market interest rates change.
Credit Report
a report of all your financial history
Balance Transfer
a type of credit card transaction in which debt is moved from one account to another