Personal Finance Quiz 6

Personal Finance Quiz 6

5 C’s of Credit
character, capacity, capital, collateral, conditions
Affinity Card
a card issued in conjunction with a specific charity or organization. That group name is on the card and a % of purchases is donated to that group
APR on unpaid balance
If you are a credit user, the most important decision factor is this
Average daily balance
This method sums the outstanding balances owed each day during the billing period and divides by the number of days in the period
Capacity
Out of the five C’s of credit this would be affected by extra use of a credit card. that is, you will begin to start carrying balances from month to month. This category considers your current income level and current borrowing level
Capital
This category considers your investment holding or portfolio
Collateral
This category considers the amount of assets or property offered as loan security
Credit Bureau
A company that gathers and sells consumers’ financial history to creditors
Credit Card Advantages
convenience or ease of shopping, emergency use, and it allows for online shopping
Credit Card Denials
often these rejections go to a new employee who works solely on commissions
Credit Card Disadvantages
They make it easy to lose control of spending, in general they are an expensive way to borrow money, and using them means you will have less spendable money in the future
Credit Card Losses
your liability on these losses is limited by law to $50
Credit Cards
These are a form of open ended and revolving credit
Credit Report Info
information generally found in your credit report includes personal and employment information, personal credit report, and your public financial history
Credit Score Card
includes annual income, length of residence, and length of time on current job
Credit Scoring
process of mathematically evaluating your creditworthiness to obtain credit
Grace Periods
Most banks eliminate this on new purchases if customers don’t pay their balance in full
Merchant’s discount fee
The percentage of the credit card sale the retailer owes to the credit card company
Previous balance
method uses the balance at the end of the previous billing period
Secured Credit Card
this card is useful to someone who has bad credit or no credit established yet
Single-purpose cards
example include Shell Oil, Toys R Us, and Sears
T&E Card Features
main feature is they do not offer revolving credit and the balance must be paid in full every month
T&E Cards
not really a credit charge card. do not offer revolving credit and require full payment of balance each month
Truth in Lending Act
requires that all consumer credit agreements disclose the APR in bold print