Responsibilities & Costs of Credit

What is credit?

• Money allocated to a specific account for future use by the consumer without borrowing
• Goods, services, or money received in exchange for a promise to pay a definite sum of money at a future date
• The ability and willingness of an individual to pay back a loan as perceived by the lender
• An individual’s character, capital, capacity, collateral and conditions

What is one example of open-end credit?

• A car payment 
• A mortgage payment 
• A credit card
• An installment loan

The amount charged if your payment is received after the billing due date.

• late payment fee
• overdue fee
• withdrawal fee
• loser fee

The maximum amount you are allowed to carry as a balance on the card

• interest
• ARP
• credit limit
• all of these

This is a fee that some, but not all, credit card issuers charge to use their credit card.

• APR
• annual fee
• monthly fee
• non-sufficient funds fee

The amount you must pay on a credit card, based on a percentage of the outstanding balance.

• minimum fee
• minimum payment
• monthly statement
• minimum monthly interest charge

Benefits of credit cards include:

• safe and convenient, bonuses are offered
• allows you to build a positive credit report
• needed for reservations and online shopping
• all of these

All of the following are examples of closed end credit EXCEPT:

• A car payment
• A student loan
• A credit card
• A mortgage payment

People who pay off their credit card balance in full each month pay less interest than those who do not.

• true
• false

The rate at which interest is charged on a credit card account is expressed in terms of its:

• Annual Percentile Reduction
• Animal Population Rescue
• Annual Popsicle Reduction
• Annual Percentage Rate