Types of Credit Voc HW3

What is the process called where debt is paid off over time in equal installments, with each payment going toward both the principal and interest?

• Amortization

• Default

• Down Payment

• Grace Period

Which term describes a yearly fee that may be charged for having a specific credit card, regardless of how you use it?

• Interest Rate

• Annual Fee

• Late Payment Fee

• Credit Limit

What is the term for long-term failure to repay a loan according to the agreed terms?

• Amortization

• Default

• Down Payment

• Grace Period

What is a down payment?

• The total amount borrowed

• A partial payment made in cash at the beginning of a purchase

• The interest charged on a loan

• The fee for late payment

What does "grace period" mean in credit terms?

• The time when interest is highest

• The number of days between a statement date and when payment is due, often without accruing interest

• The period after a loan is paid off

• The time before a loan is approved

What is interest in the context of borrowing money?

• The amount you borrow

• The amount you owe as the cost of borrowing money

• The fee for late payment

• The maximum credit limit

What is a late payment fee?

• A fee charged for borrowing money

• A fee charged if your payment is received after the due date

• A fee for exceeding your credit limit

• A fee for making a down payment

What is a loan?

• An agreement where you are credited with a fixed amount of money for a fixed period of time, usually with interest

• A fee for using a credit card

• A payment made in cash at the beginning of a purchase

• The maximum amount you can borrow

If you fail to make payments on a loan for a long period, what is the likely consequence?

• Increase in credit limit

• Default, which negatively impacts your credit score

• Lower interest rate

• No effect on your credit score

How does a grace period benefit a borrower?

• It increases the interest rate

• It allows payment after the due date without accruing interest

• It reduces the loan amount

• It increases the annual fee