Credit Cards/Finance Charge

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What is a Credit Card?

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A credit card is a plastic card issued by a financial institution that allows the cardholder to borrow funds to pay for goods and services, with the agreement to pay back the borrowed amount plus any applicable interest.

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What is a Finance Charge?

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A finance charge is the cost of borrowing money, typically expressed as a percentage of the amount borrowed, which includes interest and any additional fees.

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What is a Down Payment?

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A down payment is an initial payment made when something is bought on credit, representing a portion of the total purchase price.

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How is a Monthly Payment calculated?

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A monthly payment is calculated based on the total amount financed, the interest rate, and the loan term, often using the formula for an amortizing loan.

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What does the equation y = mx + b represent?

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This equation represents a linear relationship where 'y' is the dependent variable, 'm' is the slope, 'x' is the independent variable, and 'b' is the y-intercept.

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In the equation y = 20x + 50, what does 20 represent?

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In this equation, 20 represents the monthly payment amount.

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In the equation y = 57.25x + 100, what does 100 represent?

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In this equation, 100 represents the down payment amount.

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What is the significance of the slope in a linear equation related to payments?

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The slope indicates the rate of change of the dependent variable (payment) with respect to the independent variable (time or number of payments).

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What is the formula to calculate the total cost of a loan?

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Total Cost = Down Payment + (Monthly Payment x Number of Payments) + Finance Charges.

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What is the difference between a down payment and a monthly payment?

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A down payment is an initial payment made at the time of purchase, while a monthly payment is a recurring payment made over the term of the loan.