Chapter 5: Consumer Credit
Quiz yourself by thinking what should be in
each of the black spaces below before clicking
on it to display the answer.
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| Annual percentage rate (APR) | The standardized annual cost of credit, including
all mandatory fees paid by the borrower, expressed
as a percentage rate.
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| Average daily balance | The average of the balances owed on each day of
the billing cycle.
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| How to Avoid Identity Theft | - social security #
- Check cred. report regularly.
- Shred old statements
- Don't carry xtra c.cards/IDS
- Mail payments at p.o.
- Examine charges on c. card stments. b4 paying.
- Never give your c.card # or info over phone/internet(unless trust/se
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| Bank credit card | A credit card issued by a depository institution
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| Billing date | The last day of a billing cycle. Credit card transactions
made after the billing date appear on the
next month’s bill.
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| Cash advance | A cash loan from a credit card account.
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| Closed-end credit | Loans for a specific purpose paid back in a specified
period of time, usually with monthly payments.
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| Consumer credit | Credit used for personal needs other than home purchases.
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| Convenience check | A check supplied by a credit card lender for the
purpose of making a cash advance.
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| Cosigner | A person who agrees to take responsibility for
repayment of a loan if the primary borrower
defaults.
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| Credit | An arrangement to receive cash, goods, or services
now and pay later.
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| Credit bureau | A company that collects credit information on individuals
and provides reports to interested
lenders.
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| Credit limit | The preapproved maximum amount of borrowing
for an open-end credit account. Also known
as a credit line.
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| Due date | The date by which payment must be received by
the lender if the account holder is to avoid late
penalties and, in some cases, interest on new
transactions.
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| Electronic cash | Money in digitized format.
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| Finance charge | The dollar amount of periodic interest charged by
a lender on a credit account.
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| Grace period | The time before interest begins to accrue on new
transactions.
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| Late payment penalty | A penalty fee charged to an account for making a
payment after the due date.
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| Minimum payment | The minimum amount that must be paid by the
due date to maintain good credit standing and
avoid late payment penalties.
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| Open-end credit | Preapproved continuous loans that can cover
many purchases and usually requires monthly
partial payments. Also known as revolving credit.
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| Overlimit charge | A penalty fee charged to an account for exceeding
the credit limit.
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| Periodic rate | The stated rate divided by the number of billing
periods per year.
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| Retail credit card | A credit card that can be used only at the sponsoring
retailer’s outlets.
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| Smart card | A card that stores identification and electronic
cash in a computer chip.
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| Travel and entertainment (T&E) Card | A credit card that requires payment of the full balance each billing cycle.
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| Teaser rate | A short-term below-market interest rate intended
to encourage new customers to apply for a credit
card.
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| Transaction date | The date on which you make a credit card
purchase.
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