Chapter 16 Credit in America
false
Affinity cards charge higher interest rates than regular bank credit cards.
service
Almost everyone uses ____ credit, which involves having work preformed and paying it later.
retail
Businesses called ____ stores offer goods and services directly to consumers and include department stores, drugstores, and clothing stores.
revolving credit agreements
Credit cards such as VISA and MasterCard are examples of...
true
Credit has helped the American economy to grow at a healthy pace.
false
Department stores, drug stores, and finance companies are all examples of retail outlets.
they take more risk
Finance companies charge higher rates of interest on loans because...
sales finance company
GMAC Financial Services is an example of...
true
In an installment purchase agreement, the item you are purchasing will serve as the collateral.
usury
In some states, maximum interest rates are set by ____ laws.
false
Interest rates on loans are usually higher at credit unions than they are at banks.
true
Most disadvantages of credit can be eliminated by wise use of credit.
collateral
Pawnbrokers sell merchandise you have pawned, called ____, if you do not repay the loan plus interest by a specified date.
finance company
Small loan companies, also called ____, charge higher interest rates and take more risk.
true
The Truth-in-Lending law requires all lenders to calculate APR the same way.
true
Where no usury laws exist, financial institutions may charge whatever rate of interest is agreed upon.
telephone bill
Which of the following is an example of service credit?
pawnbroker
a legal business where loans are made based on the value of merchandise used as collateral.
open-end credit
credit whereby you can add purchases up to a set credit limit
grace period
free period that allows you to avoid a finance charge if you pay in full before the due date
finance charge
interest you pay for the use of credit
cash advance
money borrowed against the credit card limit
creditor
one who lends you money or the use of goods and services for payment at a later date
credit
paying at a future date for the present use of goods and services or money
line of credit
pre-established amount that can be borrowed on demand
collateral (definition)
something of value that can be sold to pay debt
loan sharks
unlicensed lenders who charge illegal interest rates
true
A debtor is a person who borrows money from others.
true
A line of credit is a pre-established amount you can borrow without a new loan application.
closed-end
A loan for a specific amount that must be repaid in full, including finance charges, by a stated due date, is called ____ credit.
collateral
A loan on which the goods purchased with the loan serve as ____ is a type of secured loan
sales finance company
A manufacturer-related company, called a(n) _____, makes loans through authorized representatives
deferred billing
A service to customers called _____allows you to charge now and not be billed for several months.