Ch 5 - Credit

disadvantage of retail credit cards

they carry higher interest rates than traditional CC's

Generally, in closed-end credit, the seller owns the ___________ until all debts are paid.

title

all of the following are some additional options to avoid ID theft, except

use as few online sources as possible

It is easier to regain credit if you file which type of bankruptcy?

wage earner's plan

a debtor with regular income proposes a plan for using future earnings or assets to eliminate his/her debts over a period of time

wage earner's plan

If debtor is unable to pay fees for filing bankruptcy, the courts may do what?

waive the fee

Why are the 5 C's used?

policies that help determine who will receive credit

How do you calculate debt to equity ratio?

divide liability by net worth

debt-to-equity ratio is calculated by

dividing your total liabilities by your net worth

Declared bankruptcy should always be a last resort, and people should be required to pay back at least a portion of their debt if they are able to.

Bankruptcy Abuse Prevention and Consumer Protection Act

Examples of open-ended credit

CC from retail stores travel and entertainment overdraft protection

provide debt counseling

CCCS universities credit unions military bases state and federal housing authorities

Who handles complaints regarding credit card companies?

CFPB

_________________ loans are the easiest to obtain

expensive

The Electronic Fund Transfer Act that states you may sue for actual damage plus punitive damages of not less than $_____ or more than $__________. You are also entitled to court costs and attorney fees.

$100 $1,000

The courts must charge a fee of $_______ to file for bankruptcy.

$350

Your max liability for a stolen CC is $_______, if you report it lost or stolen.

$50

CC companies sometimes provide accidental death and dismemberment insurance when you travel on a common carrier, up to how much money?

$50,000

CC companies sometimes provide auto rental collision damage wavers for damage due to collision or theft, for how much money?

$50,000 or more

Smart cards can combine what types of things?

- CC balances - driver license - health care ID - medical history - airline ticket (track flyer miles)

what types of assets have rights against bankruptcy filings

- Social security payments - unemployment comp. - net value of your home, vehicles, appliances, tools used in work - books

advantages of retail credit cards

- easier to get

Also excluded from bankruptcy relief are debts from what criminal acts?

- fraud - DUI - certain acts or crimes

What info must a debtor provide when filing a petition for bankruptcy (4)

- list of all creditors & amts - income and source - list of all property - list of monthly expenses

What happens in a straight bankruptcy

- many debts forgiven - most assets sold

Ways to protect credit info online

- secure browser - keep record of transactions - review monthly statements - read privacy and security - keep personal info private - never give password online - don't download files from strangers

6 Rules for using your Retail Credit Card

- watch holiday spending - pay bill on time - zero vs deferred interest - limit # of cards apply for - act fast if you cant pay

The release from debt does not affect what?

-alimony -child support -certain taxes -fines -certain education loans -debts you fail to disclose in bankruptcy court

To protect your card, you should take the following actions (3)

1. be sure it is returned after each purchase 2. keep a record of your CC # 3. notify the CC company immediately if stolen

If you think your ID has been stolen, the Federal Trade Commission recommends that you take the following actions (3)

1. contact credit bureau 2. contact creditors 3. file a police report

What should you do if your ID is stolen?

1. contact fraud dept 2. contact creditors 3. file police report

If you think your bill is wrong, or want more info about it, follow these steps: (2)

1. notify creditor in writing 2. pay the portion that is not in question

Expensive loans can charge rates as high as ______ % to ________ %.

12-25

Cash advance fees usually range from _____% to ______%.

2-3

With single lump-sum credit, you usually must repay the loan within how many days?

30-90

The use of credit can provide up to a _____ day float, which includes a grace period of ________ days.

50 20-25

A creditor must adjust your account or tell you why your bill is what it is within how many days?

90

what occupation Began using credit first?

farmers

Bankruptcies decreased after this bill was passed. However, poor economic conditions between 2006-2010 caused the number to increase again.

Bankruptcy Abuse Prevention and Consumer Protection Act

A type of credit where you pay back one-time loans in a specified period of time and in payments of equal amounts.

Closed-end credit

Failure to repay a loan may result in loss of income, property, and your good reputation. This is called __________________.

Collateral (security)

a nonprofit organization affiliated with the National Foundation for Consumer Credit

Consumer Credit Counseling Act (CCCS)

This act states that the maximum amount you must pay if someone uses your card illegally is $50.

Consumer Credit Protection Act

created a one-stop complaint website for credit card issues

Consumer Financial Protection Bureau

Act that states CC companies must provide 45 days notice of rate increases.

Credit Card Accountability Responsibility and Disclosure Act of 2009

If you think you can prove that a creditor has discriminated against you for any reason prohibited by this act, you may sue for actual damage plus punitive damage.

Equal Credit Opportunity Act

starts all credit applicants off on the same footing. It states that race, color, age, sex, marital status, and other factors may not be used to discriminate against you in any part of a credit dealing.

Equal Credit Opportunity Act (ECOA)

A creditor that fails to follow the rules that apply to correcting any billing errors will automatically give up the amount owed on the item in question and any finance charges on it, up to a combined total of $50. This is true even if the bill is correct.

Fair Credit Billing Act

set procedures for promptly correcting billing mistakes, refusing to make credit card or revolving credit payments on defective goods, and promptly crediting your payments.

Fair Credit Billing Act

Act that requires that solicitations for credit cards in the mail, over the phone, in print, or online must provide the necessary terms of the account

Fair Credit and Charge Card Disclosure Act

A type of credit where loans are made on a continuous basis and you are billed periodically for at least partial payment.

Open-ended credit

illustrates the rate of personal bankruptcy in the U.S.

The US Bankruptcy Act of 1978

Act that insures that if a creditor fails to disclose info as required, or gives inaccurate info, you can sue for any monetary loss you suffer.

Truth in Lending and Consumer Leasing Act

card holders who do not pay off their balance every month

borrowers

These types of cards must be paid in full within 30 days.

Travel and entertainment

A person who files for bankruptcy is called...

a debtor

If you have bad credit history and have trouble getting a credit card, look for what?

a savings institution that will give you a secured credit card

digital gift cards are sent via e-mail and usually include an ________ _______ to activate and use online to make purchases.

access code

a loan that is billed to your credit card

cash advance

______________-end credit is more common and has a _____________ interest rate charged by lenders.

closed lower

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

consumer credit

places the burden of proof for accurate credit info on the credit bureau, rather than you

consumer credit reporting reform act

card holders that pay off their balances in full each month

convenience users

an arrangement to receive cash, goods, or other services now and pay for them in the future

credit

Some CC cards offer no _________________ transaction fees, such as Capital One.

foreign

Which is mentioned as the top ID theft issue?

government documents

a loan based on your home equity

home equity loan

a direct loan of money for personal purposes, home improvements or vacation expenses.

installment cash credit

In which type of closed end credit do you make a down payment?

installment sales credit

a loan that allows you to receive merchandise, usually high-priced items, such as large appliances or furniture.

installment sales credit

The 3 most common types of closed-end credit

installment sales credit installment cash credit single-lump sum credit

a periodic charge for the use of credit, or other finance charges

interest

the max dollar amount of credit the lender has made available to you

line of credit

the ability to purchase using a mobile device

mobile commerce

Examples of closed-end credit

mortgage loans auto loans installment loans

Which type of credit is often more difficult to obtain because the lender must rely on your word?

open-ended credit

The quickest way to reduce your debt to equity ratio is to

pay off some of your debt

a prearranged loan for a specified amount that you can use by writing a special check.

revolving check credit

CC companies sometimes provide ________________ ______________ referral service for emergency roadside assistance, such as towing, locksmiths, and more.

roadside dispatch

prevents new creditors from accessing your credit file and others from opening accounts in your name until it is lifted

security freeze

a loan that must be repaid in total on a specific day

single lump-sum credit

a plastic card equipped with a computer chip that can store 500x as much data as a normal CC.

smart card

in a _____________ bankruptcy, many but not all debts are recovered.

straight

Unlike interest on most other types of credit, the interest you pay on a home equity loan is ___________________.

tax-deductible

Under the Consumer Credit Reporting Reform Act, the creditor must prove what?

that disputed info is accurate.

Perhaps the greatest disadvantage of using credit is

the temptation to overspend, especially during periods of inflation.

Experts suggest that you spend no more than _______% of your net income on consumer credit payments.

20%

If you have a particular problem with a bank in connection with any of the consumer credit protection laws, you can get advice and help from where?

The Federal Reserve System

Revolving check credit is also called

bank of line credit

Sources of consumer credit include what financial institutions.

banks and credit unions

In the Fair Credit Reporting Act, you may sue if the creditor violates the rules regarding access to your credit records. You are entitled to __________ plus _________ ___________ the court allows if the violation is proven to have been intentional

damage and punitive damage

debt payment - to - income ratio is calculated by

deciding your monthly debt payment by your net monthly income

the total dollar amount you pay to use credit

finance charge