Chapter 4: Debt (Section 1)

Chapter 4: Debt

Mary Lett

Poll

Co-signing a loan is a good way to help a friend or relative.

• Agree

• Disagree

Poll

Cash advance and title pawning are needed services but should be used with caution.

• Agree

• Disagree

Poll

The typical millionaire drives reliable used cars.

• Agree

• Disagree

Poll

Leasing a car is a smart way to drive a new car for a lower monthly payment.

• Agree

• Disagree

Poll

A new car is the largest purchase most consumers make the goes down in value.

• Agree

• Disagree

Poll

A home equity loan is a substitute for an emergency fund and a good way to consolidate debt.

• Agree

• Disagree

Poll

You need to have a credit card to rent a car or check into a hotel.

• Agree

• Disagree

Poll

It is okay to use a credit card if you pay it off every month.

• Agree

• Disagree

Poll

Teens are the number one target for credit card companies today.

• Agree

• Disagree

• Annual Fee: A yearly ​fee that's charged by the credit card company for the convenience of the credit card

• Annual Percentage Rate (APR): Cost of borrowing money on an annual basis; takes into account the interest rate and other related fees on a loan.

• Credit Card: Type of card issued by a bank that allows users to finance a purchase.

• Credit Report: A detailed report of an individual's credit history.

• Credit Score: A measure of an individual's credit risk; calculated from a credit report using a standardized formula.

​Key Terms

• Debt Snowball: Preferred method of debt repayment; includes a list of all debts organized from smallest to largest balance; minimum payments are made to all debts except for the smallest, which is attacked with the largest possible payments.

• Depreciation: A decrease or loss in value.

• Introductory Rate: An interest rate charged to a customer during the early stages of a loan; the rate often goes up after a specified period of time.

• Loan Term: Time frame that a loan agreement is in force, and before or at the end of which the loan should either be repaid or renegotiated for another term

• Tax Deduction: An expense, such as a charitable contribution, that can be deducted from one's taxable income.

​Key Terms (continued)

Open Ended

Explain how debt is actually a product that is bought and sold.

Open Ended

Does viewing debt as a product instead of a service, reward, or privilege change your overall perspective on credit cards?

Open Ended

What are some of the powerful marketing tactics used by the credit card industry?