PF: Credit 2
Lien*3
-A legal hold on property that is used as collateral to satisfy a debt -Can be used to keep borrower from selling property until debt is paid --Ex: Association Fees to be able to use the pool -Liens usually exist in second mortgages, loans against vehicle titles, etc.
Debt payments to income ratio
-Percentage of debt you have in relation to your net income -Experts suggest no more than 20% of your income should be spent on debt payments.
Cosigner of a loan
-You agree to be responsible for the loan payments if the other person doesnt pay for them -you take a chance the lending company wont
When selecting how to finance a closed ended loan, you will have to chose among various features that will affect your overall cost such as
-length of loan --longer allows smaller monthly payments, but you end up paying more interest in the long run -amount of monthly payments -interest rates
No more than _____ of your income should be spent on debt payments
20%
What's included in a Schumer Box*7
APR, grace period, finance charge, balance calculation, annual fee, cash advances, late pmt fee
Finance charges
Amount charged for credit use
Grace period
Amount of time allowed before finance charges apply
Cash advances they can be
Cash back on a loan very costly
Annual Percentage Rate (APR)
Charged for amount borrowed in terms of per dollar per year Cost of borrowing money on an annual basis; takes into account the interest rate and other related fees on a loan.
Teaser rate*2
Companies will offer a lower interest rate for balance transfers -these are often introductory rates and will only last for a short amount of time WATCH OUT FOR THESE!
T/F You should leave your credit card lying around
False
Over the limit fee
Fee charged if the credit card account balance goes over the set credit limit within one month
Who might need a cosigner
Kids, other ppl without credit
Closing date
Last day for transactions to be reported on the statement
Pros/cons of longer loans
Longer allows smaller monthly payments but more money in the end
Is a lower/higher APR/interest better for credit
Lower is better
Do I always want to chose the credit card with the lowest introductory rate?
No, teaser rates
Do review questions on both slides and vocab cards
OKAY
Late payment fee
Penalty fee for payments not made by the due date.
Equal opportunity credit act
Prohibits credit discrimination on the basis of: Race Religion Marital Status Nationality Gender Age Creditors may ask for this information (except religion) in certain situations, but may not use it to discriminate when deciding whether to grant you credit.
Fair credit reporting act*3
Regulates the use of credit report Gives consumers access to their files Right to correct any misinformation
Schumer Box allows you to know
THE TERMS AND CONDITIONS OF YOUR CREDIT CARD
Schumer Box
Terms and costs of a credit card in an easy to read box on most credit card applications and solicitations
Consumer Credit Protection Act
The maximum amount you must pay if someone uses your card illegally is $50. Nothing if you report it before card is used
Past due amount
The required amount not paid before the due date. Sum of minimum payments you missed and late payment fees since your last due date that you must pay to make your account current again
Minimum Payment*2
The smallest required payment that a credit card holder can pay on a monthly bill and still remain in good standing with the lender. If this amount is paid and a balance is left on the account additional finance charges will be included in the months following balance
charges, payments, and credits
The transactions which occur with the use of a credit card
T/F report cards stolen promptly
True
You can borrow money against a major credit card. T/F
True
You should not give out ___ unless __
account numbers unless making purchases
Transaction fees for cash advances
cash withdrawal fees
Finance charge
charges assessed for credit card usage
All credit cards have annual fees. T/F
false
Credit acts
help protect consumers
you should keep _________,____,&_____ and ___
list of all cards, account numbers, phone lists separate from cards
balance calculation method
method used to determine balance for finance charges Ex: Average Daily Balance Method(including new purchases) Balance on your card at the end of the day-take the average
Look at pics on slides like examples schumer box
ok
Look at picture&critical thinking problem on paper notes
ok
Federal truth in lending act
requires Schumer boxes on credit card applications
The federal truth in savings act
requires card issuers to display the costs of a credit card in an easy to read box format called a Schumer Box on most applications and solicitations
You should sign a card w/_____ and ____
signature; write please see id
3 types of student loans
standard: fixec payment of $50 or more income-drive: certain percent of income extended: start small, grow larger
Due date
the day by which the company requires a payment to be made
Credit line/limit
the maximum amount of charges allowed to the account Max amount someone can borrow on a credit card
New balance
the total amount owed on a credit card
Balance transfer*2
transferring a balance from one credit card to another companies will offer a lower interest rate for balance transfers (TEASER RATE)
You should close unused accounts by __&__. Also, ___
writing&phone cut up card
Annual fees
yearly charge for credit card ownership