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unit 6 vocab
| Term | Definition |
|---|---|
| Credit | arrangement through which a person may receive cash, goods, or services immediately, and pay for them in the future |
| Interest | the fee a borrower pays to the lender for using the money |
| Debtor | party who buys goods on credit or borrows money |
| Creditor | party who sells the goods or lends the money |
| Open End Credit | can be increased by the debtor by continuing to purchase goods or services on credit, up to a certain limit |
| Line of Credit | maximum amount of money made available to the buyer |
| Closed End Credit | credit that is given for a specific amount of the money and that cannot be increased by making additional purchases |
| Secured Loan | loan in which creditors obtain an interest in something of value from which they can secure payment if the debtor does not pay |
| Collateral | something of value you use to obtain a secured loan. The creditor obtains an interest in this item and can secure payment with it if you don’t pay the loan |
| Repossess | to take back |
| Equal Credit Opportunity Act | ensures that both businesses and consumers are given an equal chance to obtain credit |
| Fair Credit Reporting Act | prohibits the abuse of a valuable consumer asset-credit. This act deals with unfavorable reports issued by credit bureaus |
| Fair Credit Billing Act | allows consumers to contest charges on their credit cards within a stated time frame |
| Bankruptcy | legal process by which a debtor can make a fresh start through the sale of assets to pay off creditors |
| Homestead Exemption | debtors filing bankruptcy can keep a maximum of $16,150 in equity in a personal residence |
| APR (Annual Percentage Rate) | the true interest rate of a loan |
| Outstanding Check | checks that have been written that have not yet been returned to the bank |
| Bad Check | check that is drawn on an account in which there are insufficient funds |
| Certified Check | check that is guaranteed by the bank |
| Cashier's Check | check drawn by a bank upon itself |
| Bank Draft | checks drawn by a bank against funds the bank has on deposit |
| Money Order | draft that substitutes for a check and may be purchased for a fee from banks, post offices, stores, travel offices, and automobile clubs. |
| Traveler's Check | an instrument that requires the buyer to pay the full amount of the checks, and the offering institution guarantees the funds. |
| EFT | banking method that uses computers and electronic technology as a substitute for checks and other paper forms of banking |
| Debit Card | card used to electronically subtract money from a bank account to pay for good or services |
Created by:
everettc1
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