Plastic card equipped with a computer chip that can store 500 times as much data as a normal credit card
Travel and Entertainment (T&E) cards
Not really “credit cards”; balance is due in full each month
Diners Club; American Express
You don’t pay for services or goods at the time you purchase them
Objective 3 Determine Whether You Can Afford a Loan and How to Apply for Credit
Before you take out a loan, ask yourself...
Can you meet all your essential expenses and still afford the monthly loan payments ?
What do you plan to give up in order to make the payment?
General Rules of Credit Capacity * Not including house payment which is a long-term liability Debt Payments-to-Income Ratio Monthly Debt Payments* Net Monthly Income Consumer credit payments should not exceed a maximum of 20% of your net income . 5-
General Rules of Credit Capacity Debt To Equity Ratio Total Liabilities Net Worth* = Should be < 1 *Excluding home value 5-