Intro to Business Chapter 18
overbuying, careless buying, higher prices, overuse of credit
credit concerns
credit counseling
credit counselor discusses and suggests actions to take to reduce spending and eliminate credit difficulties Ex. Consumer Credit Counseling Service
Fair Credit Reporting Act
gives consumers the right to know what information credit bureaus are providing about them
bankruptcy
legal process of reducing or eliminating an amount owed
installment loan
one in which you agree to make monthly payments in specific amounts over a period of time
single-payment loan
one in which you make one payment at the end of the loan period
affinity cards
organizations affiliated with a card, co-branded Ex. General Motors, Cabelas, Scheels
charge cards
pay a yearly fee, must pay the full amount, business travelers use these to provide records for tax purposes Ex. American Express, Diners Club
Consumer Credit Reporting Reform Act
places the burden of proof for accurate credit information on the credit reporting agency
budget charge account
plan that you agree to make a fixed payment over a period of time
Equal Credit Opportunity Act
prohibits creditors from denying credit based on age, race, sex, or marital status
collateral
property that is used as security, loan becomes secured
statement of account
record of the transactions completed during the billing period
Truth in Lending Act
requires lenders to clearly state the annual percentage rate and total finance charge and protects consumers against unauthorized use of credit cards
Fair Credit Billing Act
requires prompt correction of billing mistakes and allows you to withhold payment due on defective merchandise purchased with a credit card
Fair Debt Collections Practices Act
requires that debt collectors treat you fairly and bans various debt collection actions
regular charge account
requires the buyer to make a full payment within a stated period (25-30 days)
principal
the amount of money promised to be paid
interest
the cost of using someone else's money
maturity date
the date on which the note is due
time
the days or months from the date on the note
payee
the one to whom the note is payable
maker
the one who promises to make payment
credit
the privilege of using someone else's money
interest rate
the rate paid for the use of the money
bank cards
very popular all over the world, may have annual fee, do not have to pay full amount, business like these because the bank takes on the liability of granting credit Ex. VISA, MasterCard, Discover
Credit Card Act
was designed to establish fair and transparent credit card practices
trade credit
when a company receives goods from a supplier and pays for them later
loan credit
when you borrow money for some special purpose
sales credit
when you charge a purchase at the time you buy a good or service
revolving charge account
you charge a purchase at any time, but only part of the debt must be paid each month
credit bureau
a credit reporting agency that gathers information on credit users and sells the information to businesses offering credit
annual percentage rate
a disclosure required by law that states the percentage cost of credit on a yearly basis
credit application
a form which you provide information needed by a lender to make a decision about granting credit
credit limit
a maximum amount that may be owed at one time
cosigner
a person that signs the note with you becomes responsible for payment if you don't pay as promised
retail store cards
Ex. Target, Kohls, Menards
promissory note
a written promise to repay based on a debtor's excellent credit history
convenience, immediate possession, savings, credit rating, useful for emergencies
benefits of credit
character, capacity, capital
What are the 3 C's of credit?
APR, finance charge
What do credit card companies have to provide for a customer?
know what you're signing
What does KWYS stand for?
I=PRT
What is the formula for interest?