Develop an understanding of debt and consumer credit

Money available for the consumer to borrow and pay it in the future.

• Consumer Credit

• debt

• credit card

A debt is an obligation owed by one party (the debtor) to a second party (the creditor) to repay it on later time.

• Consumer Credit

• debt

• credit card

It  is a small plastic card allows the holder to buy goods and services based on the holder's promise to pay for these goods and services.

• Consumer Credit

• debt

• credit card

A person or business that wishes to make purchase

• A Borrower

• A Lender

• An obligation

May be a bank, some other lending institution, or a business firm selling merchandise or services on credit

• A Borrower

• A Lender

• An obligation

Fixed (cash)  (Closed-End Credit)For Example: Mortgage, automobile, and installment loans for furniture, appliances and electronics

• TRUE

• FALSE

Revolving (non cash) (Open-End Credit) •For Example: Credit cards, departments store cards, bank credit cards, incidental credit.

• TRUE

• FALSE

Secured debt  Is debt that is not guaranteed or “backed” by any collateral.

• TRUE

• FALSE

Unsecured debt Is debt that is backed by some type of collateral (guaranteed) such as assets or revenue from the borrower.

• TRUE

• FALSE

Personal Loan, Master card and visa card are Example of Unsecured debt

• TRUE

• FALSE