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40 terms

Economics - Credit

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Installment or Closed-end credit
One time loan that the borrower must repay in a specified number of equal payments within a specific time frame.
Auto loans, mortgage, school loans
Examples of installment credit
Revolving or open-end credit
Type of credit limit that is established and the borrower can continue to borrow on the credit as long as the limit isn't exceeded.
Convenience, emergencies, rewards
Advantages of using credit
Retail credit card
An account which allows for customers to make credit card purchases at a particular retail store such as Nordstrom or REI
Bank credit card
Flexible credit card issued through a financial institution and can be used to make purchases anywhere it is accepted around the world
VISA, Mastercard, Discover
Examples of bank credit cards
Affinity Card
A credit card made available by a financial institution with the logo of a sponsoring organization that is often non-profit
Prestige Card
A high status credit card which requires higher credit qualifications and offers special benefits and higher credit limits
Charge card
This type of card requires that the balance be paid in full at the end of the billing cycle
American Express
Example of a charge card
Federal Truth in Lending Ac
Act/law which requires lenders to disclose the terms associated with a credit card account.
The Schumer's Box
Summary of the costs of a credit card. Enacted in 1988.
Grace Period
Amount of time in days that is allowed before finance charges are applied to a purchase made on a credit card.
APR
Annual Percentage Rate which is the interest rate charged on the amount borrowed in terms of dollars per year
Annual Fee
Fee charged once per year for the use of a credit card
Balance Calculation Method
Method used to determine the balance for which finance charges are accumulated
Personal, tradelines/credit history, public information and inquiries
Four categories of information found on a credit report
Equifax, TransUnion, Experian
3 credit reporting agencies
Credit limit
The maximum amount of charges allowed to a credit card account
Due Date
The specified day by which the company requires payment to be made
Late payment fee
A fee charged when the cardholder does not make the minimum monthly payment by the due date
Cash advance fee
A fee charged for a cash withdrawal from a credit card
Balance Transfer
The process of moving an unpaid credit card debt from one credit card to another
Over limit fee
Fee charged for exceeding the credit limit on the card
Period rate
Interest rate described in relation to a specific amount of time
Secured card
A credit card that a cardholder secures with a savings deposit to ensure payment of the outstanding balance if the cardholder defaults on payments.
Introductory rate
A below-market interest rate offered to entice customers to switch credit cards or lenders, usually offered for a specific period of time such as 3 months or one year
Principal
The amount of money borrowed or the amount of money owed, excluding interest
Fair Isaacs Company/FICO score
Who calculates the credit score
Unsecured debt/loan
Debt or loans not backed up by collateral
Billing Cycle
The number of days between the last statement date and the current statement date
Co-branded Card
A type card issued through a partnership between a bank and another retail company
Foreign Currency surcharge
A new charge imposed by some credit card issuers that imposes a fee on purchases made in a foreign country.
Interchange fee
The fee paid by retailers to banks and card issuers for every transaction they process. A PIN-based transaction costs less than a signature-based transaction
Interest
Money paid by a borrow for use of credit or money or money earned from loaning money
21 years, 18 with co-signer or proof of income
Age to open a credit card in own name
Inactivity fee
A fee assessed when a credit card or a gift card is not used for an extended period of time
720+
Strong credit score
Paying on time, length of credit, amount of credit used
3 factors that impact a person's credit score