Consumer Ed.
The first retail credit card was a. MasterCard. Selected: b. American Express. c. Diner's Club. d. Charg-It.
C
Is installment sales credit only short-term?
NO
Explain a balloon payment loan.
No money is paid until the loan is due. It is also referred to as a single- payment loan.
A revolving charge account can become expensive if a customer continually charges low-priced, frequently purchased items and does not pay the bill in full at the end of the month.
T
An advantage of having a credit card when traveling is that you do not need to carry much cash with you.
T
Budget charge accounts can be opened at public utility companies
T
If you purchase merchandise using installment sales credit, the merchant can take the merchandise back if you do not pay as agreed
T
Monthly payments for items purchased on credit often include a finance charge if the invoice amount is not paid in full.
T
What is meant by a "grace period"?
The grace period is the day that you buy until the day that the payment is actually due before there are incurring finance charges.
Do firms that accept credit cards believe that their sales will increase as a result?
YES
If Jeraldo purchases a microcomputer using an installment sales contract, could all remaining payments come due immediately if a payment is missed?
YES
If you co-sign a friend's note, and that friend does not pay as agreed, can you be required to pay the balance due on the note?
YES
according to the cfpb what was the number one complaint in nov 2016 what does cfpb stand for?
consumer financial protection bureau. the number one complaint had to do with debt collection
what is a credit card company doing if they are garnishing your wages?
court issues an order requiring your employer to withhold a certain amt of your paperwork and send it directly to the person or institution until your debt is paid off
A regular charge account is an example of installment credit.
f
It is not possible to pay off an installment loan early.
f
It is really not necessary to read credit or loan contracts before signing them.
f
T&E cards are identical to bank charge cards.
f
Teenagers under the age of 18 find it easy to get credit.
f
With a revolving charge account, there is usually no limit on the total amount that can be owed at any one time.
f
what does fico stand for
fair Isaac corporation
a down payment can be required on your car loan
false wouldn't be a down payment if you incl it on your loan
credit card act of 2009-
it is also called the public law III- 24 credit card accountability responsibility and disclosure act of 2009. it was signed in in may by Obama. it amends the federal trade act. truth in lending act and eft act this act is especially important for consumers because it is like a bill of rights for us. it helps us by declaring that credit card companies must alert us to increases in rates, excessive fees and rules for receiving statements.
The first bank credit card was created by
john biggins
kwys
know what you are signing
bank cards
mastercard and visa are the most popular bank cards. if a business allows customers to use bank cards, usually the business pays a fee to the bank card company the bank card company assumes most of the risks associated with collections of bad accounts. customers like these bc they are so widely accepted
Are budget charge accounts commonly used for buying clothing?
no
with a regular charge account, do you always have to make payment in full at the end of 28 days?
no
oil company cards
not very popular - used like with the white bus
what are two dangers of using revolving charge accounts?
overbuying overspending
t and e cards
travel and entertainment cards- carte blance, diners club, American express are the mostwidely used - can be used anywhere but are known for their perks - usually subscribers pay a fee to hold the card - businesses like them bc of their record of spending
teenage charge accounts
under contract law, minors cannot be held liable for their personal debts businesses are usu not willing to open charge accounts in a teens name if he or she is a minor an account can be opened if a guardian cosigns
what is a secured loan?
when someone offers collateral ( property as security) in the case they do not follow through with their payments
Is the interest charged on revolving charge accounts frequently close to 18 percent per year (1.5 percent a month)?
yes
Must a parent or guardian pay for the amount owed on a teenager's charge account if the account is past due?
yes
Should you know the circumstances under which the seller can repossess merchandise before you sign a credit contract?
yes
Would a person with a poor credit rating be able to sign a promissory note if someone is willing to lend them money?
yes
List three questions you should ask yourself before you buy something on credit.
1. How much are finance charges? 2. Does the contract include the cost of services you do not need? 3. Is there an add on feature?
List two types of people that might want to get a secured credit card.
1. Realtor 2. Car salesperson
What are the 8 parts of a promissory note?
1. The principal (amount borrowed) 2. The date issued 3. The payee 4. The interest rate 5. The maker (person promising to make the payment) 6. The time that the note should be paid given in days or months 7 the maturity date of the note 8. The signature of both parties.
What is the difference between a bank credit card and a retail store credit chard? Explain in detail. Include in your answer how each card works.
A bank card is a card like MasterCard or visa usually when these are used a fee has to be paid by the business to a company and the bank card company assumes most of the risks assoc with collection of bad accounts a retail store card is like a JCPennies card there are usu no fees assoc with these can only be used at the store that issues them they are also known as a single purpose card.
If you cosign a promissory note what are you agreeing to do?
A promissory note is a written promise to repay if the maker does not follow through with their payments.
When taking out a car loan, if you include in your note you will give the creditor a piece of expensive jewelry if you don't pay, the jewelry is a. a down payment. b. collateral. c. capacity. d. installment amount.
B
The first bank-issued credit card was a. Diner's Club. b. American Express. c. Bank of America. d. Charg-It.
D
A secured loan is one that is made by a security trust company.
F
why cant you as a teenager get a credit card by yourself? If you want one, what has to happen?
I cannot be liable for my personal debts so if I open an account my parents have to co sign so if I don't follow through with my payment then my parents have to back me up
what does it mean if you have a regular charge account. give an example of when you would use this type of account.
If you have a regular charge account the person that sold the good or service to you expects you to pay within a specified period of time. If I go to the dentist and cannot pay a bill in full right now, then I might put this on a regular account.
what is the difference between an inactivity fee for a credit card and a service fee? Give examples if necessary.
Inactivity fee is after a certain amount of time in which there are no customer initiated deposits or withdraws. Service fees are charged for maintenance or as a penalty. Like some time ago if you wrote a check there was a service fee of 10 cents for the person who wrote the check.
how do installment loans and single payment loans differ?
Installment loans- you pau in pieces plus the interest single payment loans- you pay all at once when it is due
On a promissory note, what is the principal, who is the maker, who is the payee?
The principal is the amount borrowed, the maker is the person promising to make the payment and the payee is the person receiving the payment.
Give an example of when you would use a regular, budget, and revolving account. YOU SHOULD HAVE 3 EXAMPLES. USE A COMPLETE SENTENCE FOR EACH
You might use a regular account when you have an emergency that you cannot pay for right now such as a doctor bill. A budget account might be used if you want or need to know exactly how much the bill coming in the mail will be such as an electric bill or other variable expenses. Most people prefer fixed expenses but they can lead to overpaying. Revolving accounts require that part of the bill has to be paid each month. Usually a minimum
Which of the following loans is not an installment type loan? a. Amount owed on a credit card. b. Amount owed to a mortgage company for a home loan. c. Amount owed to a bank for a car loan. d. Amount owed to a credit union for a boat loan.
a
Which of the following normally charge their customers an annual fee for holding their card? a. Travel and Entertainment Cards b. Discover Card c. Retail Credit Cards d. Gas Cards
a
what is a prepaid credit card? How does it differ from a normal credit card?
a credit card that has preloaded money on it that works like a debit card. You buy things with funds that have already been paid for while a credit card is used for things you are going to pay for later.
secured credit
a credit card with a cap of however much is in your bank acct
principal payment
a payment that is an extra payment just going toward you principal beyond what is due that month
cosigner
a second person with good credit to also sign your note. they are responsible for your payment if you do not pay a promised
what is a cash advance? is taking a cash advance a good idea?
a service provided by most credit card and charge card companies that allows cardholders to withdraw cash via atm or bank counter up to a certain limit aka credit limit
promissory note
a written promise to repay
Frank McNamera
accidentally left his wallet somewhere and promise himself he wouldn't let it happen again. when he went back to the restaurant in feb of 1950 he brought with him a small cardboard card this is known as the first supper the diner continued accepting this the card changed to plastic in the 60s.
A car loan is an example of a. revolving credit. b. installment credit. This answer is correct. c. retail credit. d. individual's credit.
b
diners is retail as charge it is to
bank
why are there so many more retail cards but mastercards dollar value is higher
bank cards can be used anywhere but retail cards can only be used in one location
what is an example of a multipurpose card?
cisa American express discover mastercard etc. this means they can be used everywhere
What is the difference between the payee the maker and the principal of a promissory note?
payee- person getting paid maker- person promising to make the payment principal- amount borrowed not inc interest
who uses a secured credit card
people w bad or no credit
collateral
property you own as security. you give the lender the right to sell this property to get back the amt of the loan in the event you do not repay it. this is called a secured loan
revolving accounts
purchases can be charged at any time but only part of the debt must be paid each month. there is usually a minimum payment required each month and a maximum amount that can be owed at any one given time a finance charge is usually added to the unpaid balance.
budget accounts
requires payments of a certain fixed amount to be made each month - ex utility companies - used on variable expenses such as air conditioning etc that change each month -fixed expenses are usu favored - budget billing = fixed bill
john biggins
responsible for coming up with the first charge it card he is responsible for creating the first that can be used in multiple locations. He thought of it in 1946. this originated from the diners club which was a large diner franchise with a about 27 restaurants all over the city. with his plan the customer could go to any restaurant, but put it on their card and pay for it later.
credit cards are _______ accounts
revolving
what is the difference between a secured loan and an unsecured loan?
secured loan- loan which the borrower pledges some asset as collateral for the loan unsecured loan- loan that is issued and supported only by the borrowers creditworthiness rather then collateral AKA signature or personal loan
what type of person needs a secured credit card? Why?
someone with bad credit would need one because they have shown that they cannot be trusted with a credit card.
secured loan
something with collateral put down
A charge account for a teenager is a privilege rather than a right.
t
Bank charge cards are generally liked by both businesses and customers.
t
Credit card accounts usually are revolving charge accounts.
t
With a revolving charge account, a finance charge is added to the bill if it is not paid in full at the end of the month.
t
business have to pay a fee to accept multipurpose cards
t
why do credit cards expire
the magnetic strip will wear out
regular account
the seller or provider expects payment in full within a specified period of time usually but not always 25-30 days after a billing cycle. - can set it up so you pay once a month - dr dentist or septic tank overflow
retail store cards
these only good at the stores that issued them and are aka single purpose cards
why do businesses like accepting multipurpose cards?
they get more business and payment is immediate
installment loan
you agree to make monthly payments in specific amounts over a period of time the payments are called installments. the total you repay includes the amount borrowed plus a finance charge. a written contract is usu signed a down payment and collateral may be required
what is an example of a benefit of a revolving account
you can buy when the price is right and pay for it over time
single payment loan
you do not pay anything until the end of the month aka a balloon loan