Personal Finance

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Personal Finance

• Credit Cards Terminology

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Annual Fee

• A charge for use of a credit card issued each
  year. The annual fee can range from 15 to 300
  and is billed directly to the customer's _______
  _________. Many credit cards come without an
  annual fee. Some cards charge high Annual Fees
  but have little or no APR.

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Annual Percentage Rate (APR)

• APR is the cost of credit expressed as a yearly
  rate. The APR includes the interest rate, points,
  _______ _____, and certain other credit charges
  that the borrower is required to pay. This is
  not the same as the _________ ______ of the card.

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Billing Error

• Any mistake in your monthly statement as defined
  by the Fair Credit Billing Act.
• This includes any of the following
• Unauthorized Charges.
• Charges listing wrong date or amount.
• Charges for goods/services that werent delivered
  or you didnt accept.
• Math errors.

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Cash Advance

• An instant loan obtained from a credit card
  account. Credit card issuers charge interest from
  the date of the advance until it is repaid, and
  may also charge a ___________ _____ based on the
  amount of the advance.
• Usually the interest rate on a cash advance is
  significantly higher than the standard interest
  rate.

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Charge Card

• A type of credit card which requires full payment
  of the bill each month no interest is charged.
• The most well known charge card is ___________
  _________.

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Co-Signer

• A person with an acceptable credit rating who
  promises to repay a debt if the ___________
  _______ to do so.

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Creditor

• A person or business from whom you _________ or
  to whom you owe money.

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Credit Scoring System

• A statistical system used to rate credit
  applicants according to various characteristics
  relevant to ____________________.
• The amount of money that you owe approximately
  accounts for 30 percent of your credit score. The
  score pays particular attention to the amount you
  owe in revolving credit such as credit cards.
• Scores range between 350 and ___.

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Credit Scoring SystemExamples

• You have several credit cards with a small
  balance that you pay off regularly, then this
  reflects _______ on your score.
• You have the same number credit cards with no
  balance, this shows a greater likelihood of
  _______ ____ those cards and thus a lower
  score.
• If you have too many credit cards it will also
  reflect poorly on your credit report.

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Credit Scoring SystemProblems

• To illustrate the way in which credit scores
  effect interest rates, the Center for Community
  Change explained in 2005
• Individuals in the top credit score tier, 720,
  will generally pay 5.546 percent for a 100,000
  __________ carrying a monthly payment of 572.
• An individual with a credit score under 559 will
  pay 7.945 percent on the same mortgage, carrying
  a _________ ________ of 730.

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Credit Limit

• The ________ ____ _________ you are authorized to
  use.
• This includes purchases, cash advances, finance
  charges and other fees.

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Equal Credit Opportunity Act

• This requires that all credit applicants be
  considered on the basis of their ________
  ______________ for credit and not be rejected
  because of certain personal characteristics.

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Fair Credit Billing Act

• This sets up procedures requiring creditors to
  promptly credit your payments and correct billing
  mistakes and allows you to __________ _________
  on defective goods.

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Finance Charge

• This is the total dollar amount you pay to use
  credit. It includes
• Interest costs
• Service charges
• Some credit-related __________ _______.

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Grace Period

• The period of time from the billing date of your
  credit card statement to the due date of your
  current bill, when you can pay in full _________
  _____ ________ interest.
• This is not the same as the Grace Period
  discussed when we covered CDs

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Joint Account

• A credit account held by two or more people so
  that all can use the account and all assume
  ______ ____________ to repay.
• Most commonly used by families between spouses or
  guardian and child.

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Open-End Credit

• Also known as revolving credit. A line of
  credit that may be used repeatedly, including
  credit cards, overdraft credit accounts, and home
  equity lines.
• _______ _______ are the most common form of
  open-end credit.

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Truth in Lending Act (TILA)

• A federal law that requires lenders to provide
  certain information so __________ can compare one
  loan to another. The most important facts lenders
  must provide are

• _________ charges in dollars
• Annual percentage rate (APR)
• Credit issuer or company providing the credit
  line
• Size of the credit line
• Length of grace period
• Minimum payment required
• Annual fees
• Fees for credit insurance