Personal Finance Quiz 6 – Flashcards
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5 C's of Credit
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character, capacity, capital, collateral, conditions
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Affinity Card
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a card issued in conjunction with a specific charity or organization. That group name is on the card and a % of purchases is donated to that group
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APR on unpaid balance
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If you are a credit user, the most important decision factor is this
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Average daily balance
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This method sums the outstanding balances owed each day during the billing period and divides by the number of days in the period
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Capacity
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Out of the five C's of credit this would be affected by extra use of a credit card. that is, you will begin to start carrying balances from month to month. This category considers your current income level and current borrowing level
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Capital
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This category considers your investment holding or portfolio
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Collateral
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This category considers the amount of assets or property offered as loan security
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Credit Bureau
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A company that gathers and sells consumers' financial history to creditors
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Credit Card Advantages
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convenience or ease of shopping, emergency use, and it allows for online shopping
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Credit Card Denials
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often these rejections go to a new employee who works solely on commissions
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Credit Card Disadvantages
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They make it easy to lose control of spending, in general they are an expensive way to borrow money, and using them means you will have less spendable money in the future
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Credit Card Losses
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your liability on these losses is limited by law to $50
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Credit Cards
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These are a form of open ended and revolving credit
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Credit Report Info
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information generally found in your credit report includes personal and employment information, personal credit report, and your public financial history
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Credit Score Card
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includes annual income, length of residence, and length of time on current job
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Credit Scoring
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process of mathematically evaluating your creditworthiness to obtain credit
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Grace Periods
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Most banks eliminate this on new purchases if customers don't pay their balance in full
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Merchant's discount fee
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The percentage of the credit card sale the retailer owes to the credit card company
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Previous balance
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method uses the balance at the end of the previous billing period
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Secured Credit Card
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this card is useful to someone who has bad credit or no credit established yet
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Single-purpose cards
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example include Shell Oil, Toys R Us, and Sears
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T&E Card Features
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main feature is they do not offer revolving credit and the balance must be paid in full every month
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T&E Cards
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not really a credit charge card. do not offer revolving credit and require full payment of balance each month
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Truth in Lending Act
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requires that all consumer credit agreements disclose the APR in bold print
