Help
Options
Didn't know it?
click below
click below
Knew it?
click below
click below
Don't Know
Remaining cards (0)
Know
retry
shuffle
restart
0:00
Embed Code - If you would like this activity on your web page, copy the script below and paste it into your web page.
Normal Size Small Size show me how
Normal Size Small Size show me how
Financial Literacy
Study Guide Chapter 6
| Term | Definition |
|---|---|
| What is an amortization schedule? | An amortization schedule is a detailed table mapping the periodic payments of a loan over its lifetime. |
| What is the flood zone that does not require insurance? | Zone X, B, and C |
| On average if you pay “one more” house note a year, how many years will you save on your mortgage? | 5-7 |
| When you pay extra for your house, what do you pay it for? | You are paying down the principal balance. This reduces the loan amount, allowing you to pay less in total interest over the life of the loan. |
| What are the two main components of escrow? | Property taxes and homeowner’s insurance. |
| What are two advantages of credit? | Advantages- 1: Redemption of your points or miles for gift cards or cash, or to book travel-from airline, hotels, and rental cars to vacation packages. 2: Roadside dispatch referral service & accidental death and dismemberment insurance when you travel on |
| Closed end credit and open end credit examples: | Closed- One-time loan with a fixed amount and repayment schedule, such as an auto loan or mortgage. Open- Allows repeated borrowing up to a limit, such as a credit card or home equity line of credit. |
| What are two disadvantages of credit? | Disadvantages- 1:Failure to repay a loan may result in loss of income, valuable property, and your good reputation. 2:Misuse of credit can create serous long-term financial problems, damage family relationships, and delay progress towards financial goals. |
| How do you calculate your debt payments-to-income ratio? | Spend no more than 20 percent of your net (after-tax) income on credit payments. |
| What are the 5Cs or credit? | Character, capacity, capital, collateral, and conditions |
| Credit- | An arrangement to receive cash, goods, or services now and pay for them in the future. |
| Consumer Credit- | The use of credit for personal needs (except a home mortgage) by individuals and families, in contrast to credit used for business purposes. |
| Closed-End Credit- | One-time loans that the borrower pays back in a specified period of time and in payments of equal amounts. |
| Open-End Credit- | A line of credit in which loans are made on a continuing basis and the borrower is billed periodically for at least partial payment. |
| Line of Credit- | A short term loan that is approved before you actually need the money. |
| Interest- | A periodic charge for the use of credit. |
| Finance Charge- | The total dollar amount paid to use credit. |
| Character- | The borrower’s attitude toward his or her credit obligations. |
| Capacity- | The borrower’s ability to pay additional debts. |
| Capital- | The borrower’s assets or net worth. |
| Collateral- | A valuable asset that is pledged to ensure loans payments. |
| Conditions- | The general economic conditions that can affect a borrower’s ability to repay a loan. |
| Annual Percentage Rate (APR)- | The percentage cost (or relative cost) of credit on a yearly basis. The APR yields a true rate of interest for comparisons with other sources of credit. |
| Simple Interest- | Interest computed on principal only and without compounding. |
Created by:
volleyball09