Understanding Debt and Credit

Front

Define debt.

Back

Money owed to another person or company.

Front

Understand the relationship between credit and debt.

Back

Credit is a financial product that is heavily marketed, and it often leads to debt.

Front

Identify sources and types of credit.

Back

Credit Cards - with Revolving Credit

Secured Loans - Using Collateral to guarantee payment of loan

Personal Loans - Unsecured loans

Home Mortgage - Lien on the property

Home Equity Loans - Lien on property

Student Loans

Auto Loans -Installment Credits

Front

Difference between revolving and installment credit.

Back

Revolving credit automatically renews with payments, while installment credit is a fixed loan paid back in monthly installments.

Front

Recognize a predatory lender.

Back

A predatory lender uses deceptive, unfair, or fraudulent practices on borrowers who are desperate for cash.

Front

Define revolving credit.

Back

Credit that automatically renews whenever a payment is made to reduce the debt.

Front

Define collateral.

Back

Something owned (that has value) offered as security on a debt; if not repaid, the item is forfeited to the lender.

Front

Define lien.

Back

A legal claim against (or right to own) an asset until the debt (loan) is repaid.

Front

Define appreciating asset.

Back

An asset that increases in value over time.

Front

Define equity.

Back

The increase in value of a home over time; the difference between the amount owed and what the home could be sold for.