Personal Finance Unit 4: Credit
Credit Unions
A not-for-profit institution that is owned by members and organized for their benefit.
Credit Score
A number assigned to a person that indicates to lenders their capacity to repay a loan.
Closed-End Credit
A one-time loan that you will pay back over a specified period of time in payments of equal amounts. Examples include a mortgage, vehicle loan, and installment loans.
Pay Day Loans
A relatively small amount of money lent at a high rate of interest on the agreement that it will be repaid when the borrower receives their next paycheck.
Checking account
Account held at a bank or credit union into which account owners deposit funds.
Overdraft
Account holder does not have enough money to cover transactions from checks, ATM withdrawals, debit card purchases, or electronic payments.
Balance
Amount available in an account for withdrawal or use.
Annual Percentage Yield
Amount of interest that a $100 deposit would earn, after compounding, for one year.
Liquidity
How quickly an asset can be turned/changed into cash.
Other Financial Services
Includes insurance, investments, income tax assistance, and financial planning.
Open-End Credit
Loan with a certain limit on the amount of money you can borrow. Examples include credit cards.
Credit Line
Maximum amount of money a borrower can charge on, or withdraw from, a particular credit account.
Borrowing
Obtaining money for a short term or long term loan.
Pawn Shop
Offers secured loans to people, with items of personal property used as collateral.
Automatic Electronic Transfer
Online payment that is automatically deducted from the account balance on a recurring basis.
Five Credit Score Factors
Payment History, Amounts Owed, Length of Credit History, New Credit, Types of Credit Used.
Rate of Return
Percentage of increase in the value of your savings from earned interest.
Compounding Interest
Process in which interest is earned on both the principal and the amount deposited.
APR
The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents the actual yearly cost of funds over the term of a loan.
Minimum Payment
The smallest amount of a credit card bill that a consumer can pay, to remain in good standing with the credit card company.
Payment Services
Transferring money from a personal account to a business or individual.
Capital
What are your assets and net worth?
Collateral
What assets do you have to secure the loan?
Conditions
Who is your employer?
Savings
storage of funds for future use.
Check Cashing Oulet
A check cashing service is a company that will cash a check for a fee.
Banks
A for-profit institution that offers a range of financial services.
Debit Card
"Pay now" point-of-sale transaction card that replaces cash and checks.
Rent-to-Own Centers
An arrangement between a consumer and a seller that allows the consumer to rent furniture, appliances and other goods for a defined period of time.
ATM (Automated Teller Machine)
An electronic banking service that allows customers to obtain cash and check account balances.
Cash Back/Rewards
An incentive program operated by credit card companies where a percentage of the amount spent is paid back to the card holder.
Annual Fee
Any fee that is charged on an annual (yearly) basis.
Character
Are you trustworthy and stable?
Capacity
Can you repay the loan?
Direct Deposit
automatic deposit of net pay to a designated bank account.