Finance review

• principlal


  The amount of money borrowed
• interest (APR)


  the price paid for the use of borrowed money
• term


  the time remaining until the repayment date
• Credit Score


  Summarizes your credit history based on your financial behavior/financial history. Determines the interest rate
• Credit limit


  The maximum dollar amount that can be borrowed
• interest rate


  Percentage paid to a lender for the use of borrowed money (in debt); percentage earned on invested principal (in investing)
• Balance


  Amount owed on existing line of credit.
• Credit Report


  A detailed report of an individual's credit history
• Minimum Monthly Payment (Credit)


  The minimum you need to pay on your credit card each month to avoid a late fee
• secured loan


  Loan that is backed up by collateral
• collateral


  something pledged as security for repayment of a loan, to be forfeited in the event of a default.
• unsecure loan


  a loan in which the borrower does not put up collateral.
• asset


  Anything of value that is owned, makes you money
• liability


  an amount owed, takes money away
• net worth


  the difference between assets and liabilities, money thats yours
• Cosigner


  Someone who promises to pay if the borrower fails to pay
• variable rate- This refers to an interest rate that is based on an interest rate index, which means the rate can change over

  the life of the loan.
• fixed rate- an interest rate that does not change over time.
• installment loans/credit


  a loan that is repaid with a fixed number of periodic equal-sized payments. (Auto loans, many mortgages, home improvement loans, student loans)
• revolving credit


  an account on which the account holder can charge repeatedly up to a maximum limit (Credit cards, Home equity lines of credit, unsecured credit, overdraft protection accounts)
• Debit Card vs. Credit Card


  DEBIT CARD- from bank account. An advantage of a debit card is there is no interest on a debit card.

  CREDIT CARD- borrowed money from third party. An advantage of a credit card is you can spend more than you have. (also disadvantage)
• debit card benefits


  -doesn't affect credit history (Credit score)

  -accessible
• debit card disadvantage


  - ATM charges for out-of-network banks.

  - overdraft fees

  - secure (FDIC insured)
• debit card disadvantage
• credit card disadvantage


  - not protected if stolen (only okay if you prove its stolen)
• credit card disadvantage- - not protected if stolen (only okay if you prove its stolen)
• prepaid card advantages


  -accessible

  -good for traveling
• late fee


  A fee charged when a payment is not received on time (after grace peroid)
• Grace Period


  A time period during which no finance charges will be added to your account
• credit limit


  The maximum dollar amount that can be borrowed
• Available credit


  the preset amount of credit available on a credit card
• average daily balance


  the average amount you owe on the credit card during each day of the billing cycle
• credit report


  A detailed report of an individual's credit history
• minimum monthly payment


  the smallest amount you can pay and remain a borrower in good standing
• Credit Card Benefits


  - builds credit score

  - offers rewards

  - extra financial means (emergency)
• prepaid card disadvantages


  -doesn't help credit score

  - many fees
• Payday Loan


  A loan designed to be taken out for only a very short period, which charges a very high APR.
• benefits of a high credit score


  better loan terms, lower interest rates, more likely to get a loan
• Credit History


  A summary of a person's borrowing and repayment history
• credit bureau


  a business that gathers, stores, and sells credit information to other businesses