The List: Download Vocabulary
Flash Cards: Check Comprehension
The Vocabulary:
Annual fee – The annual membership fee, if any, to have a credit card
APR – Annual Percentage Rate- The cost of credit for one year expressed as a percentage
Capital – Wealth available to produce more wealth; assets of a person or business after liabilities are deducted
Closed-end credit – A contract for the loan of a specified amount in which the contract issued tells the amount of purchase, the total finance charge, and the amount of each payment
Collateral – Savings, bonds, insurance policy, jewelry, property or other item that is pledged to pay off a loan or other debt if payments are not made according to the contract; also called security
Co-signer – A person other than the borrower who assumes equal responsibility for a loan or lease
Credit bureau – A for-profit company that is in the business of accumulating, storing, and distributing credit information
Credit line – An arrangement in which a bank or vendor extends a specified amount of unsecured credit to a specified borrower for a specified time period
Credit report – A written report issued by a credit bureau that contains relevant information about a person’s creditworthiness
Default – A status assigned to a cardholder if he or she fails to perform or conform to all the items listed in the cardholder agreement
Delinquent – Failing to make a required payment on time
Down payment – An amount given as security for a loan to ensure that other remaining payments will be made
FCBA – Fair Credit Billing Act – Federal law that covers credit card billing problems. It applies to all open-end credit accounts (e.g., credit cards, overdraft checking)
FCRA – Fair Credit Reporting Act – Consumers’ rights are protected when collecting and reporting information when applying for credit, insurance, and employment
Fee – A charge for services rendered
FICO score – Fair Isaac Credit Organization score – the most widely used credit score model in the United States
Finance charge – The percentage charge applied to the daily or monthly balances as described in the credit agreement
Finance company – A company that makes loans to individuals and/or businesses
Grace period – The period of time from the billing date of your last credit card bill to the due date of your current bill, when you can pay in full without being charged interest
Installment loan – A loan to be repaid in fixed payments that include principal and interest
Interest – Money paid for the use of money; earnings on a savings account
Minimum payment – The smallest payment you can make to maintain a credit account on current status
Open-ended credit – A line of credit which can be used repeatedly until a certain limit is reached
Payday loan – A small, short-term loan that is intended to cover a borrower’s expenses until his or her next payday
Predatory lending – Lending practices which are fraudulent, deceptive, discriminatory, or unfavorable. The practices may be legal, but they are not in the best interest of the borrower
Prime rate – An index rate that is used to determine the APR in a variable interest rate account
Repossession – When a lender or seller takes back property from the borrower or buyer, usually due to default
Revolving credit – A credit agreement that allows consumers to pay all or part of the outstanding balance on a loan or credit card. As credit is paid off, it becomes available to use again
Secured credit card – A consumer uses savings or other collateral to guarantee the credit card; the limit of credit is based on the amount of collateral available
Truth-in-Lending – A law that required a lender to inform a borrower of the amount financed, total finance charges, annual percentage rate, payment schedule, and many more important figures
Unsecured debt – A credit source that is not guaranteed with collateral
Usury laws – Laws setting maximum interest rates that lenders may charge
