Types of Credit Vocabulary Flashcards

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Annual Fee

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A yearly charge by some credit card companies for use of the card.

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Annual Percentage Rate (APR)

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The annual rate of interest charged on a loan or earned by an investment.

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Auto Loan

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A loan used to finance the purchase of a vehicle.

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Balance Transfer

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Moving debt from one credit card to another, often with a lower interest rate.

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Bank Loan

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Money borrowed from a bank, usually with set repayment terms and interest.

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Cash Advance

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A short-term loan taken against your credit card limit, typically with high fees and interest.

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Collateral

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An asset pledged to secure a loan, which the lender can seize if payments aren’t made.

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Co-signer

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A person who agrees to take responsibility for loan payments if the borrower defaults.

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Credit Card

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A card that allows purchases on credit up to a specified limit, with a requirement to pay back later.

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Credit Limit

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The maximum amount a borrower is allowed to charge on a credit card or line of credit.