53 terms

Financial Algebra Chapter 4 Vocabulary

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account number
A unique number that identifies a credit card holder.
annual percentage rate (APR)
The interest rate paid per year or charged per year.
assets
A person's property or what is owned.
available credit
The difference between the maximum amount allowed and the actual amount owed on a credit card.
average daily balance
The average amount owed per day during the billing cycle.
balloon payment
The last monthly payment on some loans that is much greater than the previous payments.
billing cycle
A predetermined amount of time set by the credit card company that is used for calculating a credit card bill.
billing date
The date that a credit card statement was written.
charge card
A special type of credit card where the monthly bills for all purchases must be paid in full and there is no interest charged.
collateral
Security, such as a personal belonging, car or boat title, CD, or stock certificates, that insures a loan will be paid.
cosigner
A person that signs a promissory note along with the borrower and agrees to pay back the loan if the borrower does not.
credit
When something is bought that is not paid for at the time of purchase.
credit calendar
A calendar method of finding the average daily balance of a credit card.
credit card
A type of credit card account that has a revolving charge where the entire bill does not have to be paid in full each month.
credit card statement
An accounting of the credits and debits in the form of a monthly report sent to a credit card holder.
credit line
The maximum amount that a person can owe on a credit card at one time.
credit rating
A credit report card that shows how well a user of credit meets their financial obligations; these records are used by creditors when they decide to issue credit.
credit reporting agency
Organizations that compile records on users of credit as to how well they repay their debts.
creditor
Organization or person who extends credit to debtors.
debit card
A card that acts like an electronic check and is not a credit or charge card; with each purchase, the amount is deducted from a checking account; purchases may not exceed the balance in the account.
debit/credit
A debit is the amount charged to an account; a credit is payment made to reduce your debt; credits are identified by a negative (-) sign.
debtor
Organization or person who uses credit.
down payment
The upfront money applied to a purchase that is made with a loan (credit).
earning power
A person's ability to earn money now and in the future.
Electronic Funds Transfer Act
The law that protects debit card users against unauthorized use of their cards; users are not responsible for purchases made with a lost or stolen card after the card is reported missing.
Fair Credit Billing Act
The law that gives protection to a consumer in the case of errors on a monthly credit card statement; consumers are not responsible for a disputed amount or the finance charges that amount accrues, until the error is cleared up.
Fair Debt Collection Practices Act
The law that prohibits the creditor from harassing or using unfair means to collect the amount owed.
FICO score
A score that summarizes the probability that a debtor will pay a debt and is a reliable way that creditors judge credit worthiness.
finance charge
The interest that is charged to a buyer when paying for a purchase or service over time.
impulse buying
When a consumer purchases something to which they suddenly were attracted and had no intention of buying.
installment plan
A method of payment of a purchase or services over a period of time.
interest
The finance charge or fee that is charged to an installment buyer when paying for a purchase or service over time.
late charge
The penalty charged for late payments from a previous month.
lending institutions
Organizations that extend loans; they make their profit by charging interest; lending institutions include banks, savings and loans, credit unions, consumer finance companies, life insurance companies, and pawnshops.
life insurance
A type of insurance that pays a specified amount upon the policy holder's death; a creditor often requires a borrower to take out life insurance to cover the loan in the event the borrower dies before the loan is paid.
mean
Often referred to as average; the sum of all the numbers in a data set divided by the number of elements in the data set.
minimum payment
An amount that is the lowest payment the credit card company will accept for the current billing period.
monthly periodic rate
The APR divided by 12; the rate of interest charged each month.
new balance
The amount currently owed on a credit card.
new purchases
The sum of purchases or debits on an account.
number of days in billing cycle
The amount of time, in days, covered by the current bill.
payment due date
The due date, or the date the monthly payment must be received by the creditor.
payments/credits
The total amount received by the creditor that is applied to the account.
prepayment penalty
An amount borrowers pay as a fee if they wish to pay back an entire loan before the due date.
prepayment privilege
An agreement that allows the borrower to make payments before the due date to reduce the amount of interest.
previous balance
Any money owed prior to the current billing period.
principal
The balance, or amount of money, in an account, or amount borrowed.
promissory note
An agreement which states the conditions of a loan; a borrower's signature confirms a promise to pay back the loan as outlined in the agreement.
revolving charge account
A type of credit card where the entire bill does not have to be paid in full each month; there is a minimum monthly payment and finance charge the month following any month were the bill is not paid in full.
transaction
A purchase, cash advance, or payment made using a credit card.
Truth-in-Lending Act
This law offers protection if a credit card is lost or stolen if a consumer contacts the credit card company immediately after losing a credit card or the card is stolen, the maximum liability is $50.
wage assignment
A voluntary deduction from an employee's paycheck, used to pay off debts.
wage garnishment
An involuntary form of wage assignment, often done by court order.