PF: Credit 2

Lien*3

-A legal hold on property that is used as collateral to satisfy a debt -Can be used to keep borrower from selling property until debt is paid --Ex: Association Fees to be able to use the pool -Liens usually exist in second mortgages, loans against vehicle titles, etc.

Debt payments to income ratio

-Percentage of debt you have in relation to your net income -Experts suggest no more than 20% of your income should be spent on debt payments.

Cosigner of a loan

-You agree to be responsible for the loan payments if the other person doesnt pay for them -you take a chance the lending company wont

When selecting how to finance a closed ended loan, you will have to chose among various features that will affect your overall cost such as

-length of loan --longer allows smaller monthly payments, but you end up paying more interest in the long run -amount of monthly payments -interest rates

No more than _____ of your income should be spent on debt payments

20%

What's included in a Schumer Box*7

APR, grace period, finance charge, balance calculation, annual fee, cash advances, late pmt fee

Finance charges

Amount charged for credit use

Grace period

Amount of time allowed before finance charges apply

Cash advances they can be

Cash back on a loan very costly

Annual Percentage Rate (APR)

Charged for amount borrowed in terms of per dollar per year Cost of borrowing money on an annual basis; takes into account the interest rate and other related fees on a loan.

Teaser rate*2

Companies will offer a lower interest rate for balance transfers -these are often introductory rates and will only last for a short amount of time WATCH OUT FOR THESE!

T/F You should leave your credit card lying around

False

Over the limit fee

Fee charged if the credit card account balance goes over the set credit limit within one month

Who might need a cosigner

Kids, other ppl without credit

Closing date

Last day for transactions to be reported on the statement

Pros/cons of longer loans

Longer allows smaller monthly payments but more money in the end

Is a lower/higher APR/interest better for credit

Lower is better

Do I always want to chose the credit card with the lowest introductory rate?

No, teaser rates

Do review questions on both slides and vocab cards

OKAY

Late payment fee

Penalty fee for payments not made by the due date.

Equal opportunity credit act

Prohibits credit discrimination on the basis of: Race Religion Marital Status Nationality Gender Age Creditors may ask for this information (except religion) in certain situations, but may not use it to discriminate when deciding whether to grant you credit.

Fair credit reporting act*3

Regulates the use of credit report Gives consumers access to their files Right to correct any misinformation

Schumer Box allows you to know

THE TERMS AND CONDITIONS OF YOUR CREDIT CARD

Schumer Box

Terms and costs of a credit card in an easy to read box on most credit card applications and solicitations

Consumer Credit Protection Act

The maximum amount you must pay if someone uses your card illegally is $50. Nothing if you report it before card is used

Past due amount

The required amount not paid before the due date. Sum of minimum payments you missed and late payment fees since your last due date that you must pay to make your account current again

Minimum Payment*2

The smallest required payment that a credit card holder can pay on a monthly bill and still remain in good standing with the lender. If this amount is paid and a balance is left on the account additional finance charges will be included in the months following balance

charges, payments, and credits

The transactions which occur with the use of a credit card

T/F report cards stolen promptly

True

You can borrow money against a major credit card. T/F

True

You should not give out ___ unless __

account numbers unless making purchases

Transaction fees for cash advances

cash withdrawal fees

Finance charge

charges assessed for credit card usage

All credit cards have annual fees. T/F

false

Credit acts

help protect consumers

you should keep _________,____,&_____ and ___

list of all cards, account numbers, phone lists separate from cards

balance calculation method

method used to determine balance for finance charges Ex: Average Daily Balance Method(including new purchases) Balance on your card at the end of the day-take the average

Look at pics on slides like examples schumer box

ok

Look at picture&critical thinking problem on paper notes

ok

Federal truth in lending act

requires Schumer boxes on credit card applications

The federal truth in savings act

requires card issuers to display the costs of a credit card in an easy to read box format called a Schumer Box on most applications and solicitations

You should sign a card w/_____ and ____

signature; write please see id

3 types of student loans

standard: fixec payment of $50 or more income-drive: certain percent of income extended: start small, grow larger

Due date

the day by which the company requires a payment to be made

Credit line/limit

the maximum amount of charges allowed to the account Max amount someone can borrow on a credit card

New balance

the total amount owed on a credit card

Balance transfer*2

transferring a balance from one credit card to another companies will offer a lower interest rate for balance transfers (TEASER RATE)

You should close unused accounts by __&__. Also, ___

writing&phone cut up card

Annual fees

yearly charge for credit card ownership