Types of Credit Unit Vocab (NGPF)

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Adjustable-Rate Mortgage (ARM)

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A mortgage in which the initial interest rate is normally fixed for a specified period of time, after which it is reset periodically, often every month.

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Amortization

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The paying off of debt over time in equal installments; part of each payment goes toward the loan principal while the other part goes toward interest.

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Annual Fee

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A yearly fee that may be charged for having a specific credit card, independent of how you use the card.

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Annual Percentage Rate (APR)

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The cost you pay each year to borrow money, including fees, expressed as a percentage.

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Authorized User

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A person who has permission to use and/or carry another person's credit card but isn't legally responsible for paying the bill.

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Cash Advance

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A credit card service that allows cardholders to withdraw a certain amount of cash, either through an ATM or directly from a bank, typically at a high interest rate or for a fee.

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Cash Back

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A credit card benefit that pays the cardholder a small percentage of their net expenditures, often as cash, payment toward their balance, reward points, travel miles, or gift cards.

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Charge Card

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A special type of credit card with no interest because you must pay the balance in full each month.

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Collateral

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Something valuable that the lender can take as payment if you can't or don't repay your secured loan.

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Consolidation Loan

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A loan that combines two or more education loans into a single loan, allowing the borrower to make a single monthly payment.