Personal Finance chapters 6,7, and 8

Open- end credit

A line of credit in which loans are made on a continous basis and the borrower is billed periodically for at least partial payment.

small claims court

a court that settles legal differences involving amounts below a set limit and employs a process in which litigants usually do not use a lawyer.

Truth in Lending Law

a federal law that requires creditors to disclose the annual percentage rate (APR) and the finance charge as a dollar amount.

Fair Debt Collection Practices Act (FDCPA)

a federal law, enacted in 1978, that regulates debt collection activities.

class action suit

a legal action taken by a few individuals on behalf of all people who have suffered the same alleged injustice

home equity loan

a loan based on the current market value of a home less the amount still owed on the mortgage.

Consumer Credit Counseling Service (CCCS)

a local, nonprofit organization that provides debt counseling services for families and individuals with serious financial problems

Rule of 78s

a mathematical formula to determine how much interest has been paid at any point in a loan term

add-on interest method

a method of computing interest in which interest is calculated on the full amount of the orginal principal.

Equal Credit Opportunity Act (ECOA)

bans discrimination in the extension of credit on the basis of race, color, age, sex, marital status, and other factors.

debit card

electronically subtracts the amount of a purchase from the buyers account at the moment the purchase is made.

simple interest

interest computed on principal only and without compounding.

character

the borrower's attitude toward his or her credit obligations

Consumer Credit Reporting Reform Act

Places the burden of proof for accurate credit information on the credit reporting agency.

closed-end credit

One-time loans that the borrower pays back in a specified period of time and in payments of equal amounts.

Credit Card Accountability, Responsibility, and Disclosure Act.

Places new restrictions on credit card lending and elimainates certain fees.

rebate

a partial refund of the price of a product

open datin

information about freshness or shelf life found on the package of a perishable product.

Consumer Credit

refers to the use of credit for personal needs (except a home mortgage) by individuals and families, in contrast to credit used for business purposes.

capital

the borrower's assets or net worth

arbitration

the settlement of a difference by a third party whose decision is legally binding.

impulse buying

unplanned buying

Fair Credit Reporting act

Regulates the use of credit reports, requires the deletion of obsolete information, and gives consumers access to their files and the right to have erroneous data corrected.

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.

service contract

a agreement between a business and a consumer to cover the repair costs of a product.

previous balance method

a method of computing finance charges that gives no credit for payments made during the billing period.

average daily balance method

a method of computing finance charges that uses a weighted average of the account balance through-out the current billing period.

declining balance method

a method of computing interest when more than one payment is made on a simple interest loan.

cooperative

a nonprofit organization whose member-owners may save money on certain products or services.

interest

a periodic charge for the use of credit

Credit bureau

a reporting agency that assembles credit and other information about consumers.

collateral

a valuable asset that is pledged to ensure loan payments.

Chapter 13 bankruptcy

a voluntary plan that a debtor with regular income develops and proposes to a bankruptcy court.

warranty

a written guarantee from the manufacturer or distributor of a product that specifies the conditions under which the product can be returned, replaced, or repaired.

Credit Insurance

any type of insurance that ensures repayment of a loan in the event the borrower is unable to repay it.

Credit

is an arrangement to receive cash, goods, or services now and pay for them later.

legal aid society

one of a network of publicily supported community law offices that provide legal assistance to consumers who cannot afford their own attorney.

Chapter 7 bankruptcy

one type of personal (or straight) bankruptcy in which many debts are forgiven.

adjusted balance method

the assessment of finance charges after payments made during the billing period have been subtracted.

mediation

the attempt by impartial third party to resolve a difference between two parties through discussion and negotiation

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

the percentage cost of credit on a yearly basis. the APR yields a true rate of interest for comparison with other sources of credit.

Finance charge

the total dollar amount paid to use credit.

unit pricing

the use of a standard unit of measurement to compare the prices of packages of different sizes.