PF Spending and Credit Vocab

2. CREDIT BUREAU
• FIRMS THAT COLLECT, STORE, ANALYZE,
SUMMARIZE AND SELL CREDIT RELATED
INFORMATION ON PEOPLE AND FIRMS FOR A FEE

3. CREDIT REPORT
• REPORT CARD ON YOUR CREDIT

4. ANNUAL PERCENTAGE RATE (APR)
• COST OF CREDIT EXPRESSED AS A YEARLY RATE
• INCLUDES:
• INTEREST RATE
• POINTS
• BROKER FEES
• CERTAIN OTHER CREDIT CHARGES THAT THE
BORROWER IS REQUIRED TO PAY

5. FINANCE CHARGE
• TOTAL COST OF BORROWING
• INCLUDES:
• INTEREST CHARGES
• COMMITMENT FEES
• OTHER CHARGES PAID BY BORROWER TO THE LOAN FACILITY

6. CREDIT
• AGREEMENT BASED LARGELY ON TRUST UNDER WHICH GOODS,
SERVICES, OR MONEY IS EXCHANGED AGAINST A PROMISE TO PAY
LATER.

7. COMPARISON PRICING
• TO SHOP FOR BARGAINS BY
COMPARING THE PRICES OF
COMPETING BRANDS OR STORES

8. DEBT COLLECTOR
• A PERSON OR AGENCY HIRED TO
COLLECT MONEY THAT IS OUTSTANDING.
• HAVING THIS HAPPEN NEGATIVELY
AFFECTS YOUR CREDIT.

9. STICKER PRICE
• THE LISTED PRICE FOR AN ITEM.
• USUALLY, IT IS THE MANUFACTURER’S SUGGESTED
RETAIL PRICE (MSRP).
• IT MAY BE NEGOTIABLE.

10. OPEN ENDED CREDIT- REVOLVING CREDIT
• OPEN END CREDIT: IS NOT RESTRICTED TO A SPECIFIC USE OR DURATION.
• CREDIT CARD ACCOUNTS, HOME EQUITY LINES OF CREDIT (HELOCS) ARE ALL COMMON EXAMPLES
OF OPEN-END CREDIT (THOUGH SOME, LIKE THE HELOC, HAVE FINITE PAYBACK PERIODS). THE
ISSUING BANK ALLOWS THE CONSUMER TO UTILIZE BORROWED FUNDS IN EXCHANGE FOR THE
PROMISE TO REPAY ANY DEBT IN A TIMELY MANNER.
• UNLIKE CLOSED-END CREDIT, THERE IS NO SET DATE WHEN THE CONSUMER MUST REPAY ALL OF
THE BORROWED SUM. INSTEAD, THESE DEBT INSTRUMENTS SET A MAXIMUM AMOUNT THAT CAN
BE BORROWED – THOUGH THIS – AND REQUIRE MONTHLY PAYMENTS BASED ON THE SIZE OF THE
OUTSTANDING BALANCE. THESE PAYMENTS INCLUDE INTEREST, OF COURSE.
•

11. CLOSE ENDED CREDIT
CLOSED-ENDCREDIT: ISA LOANOREXTENSION
OFCREDITIN WHICH THEPROCEEDSARE
DISPERSEDIN FULL WHEN THE LOANCLOSES
AND MUSTBE REPAIDBY A SPECIFIEDDATE.
A CAR LOAN IS AN EXAMPLE OF
CLOSE-ENDED CREDIT.
A MORTGAGE IS AN EXAMPLE
OF CLOSE ENDED CREDIT.
Common types of closed-end credit
instruments include mortgages and
car loans. Both are loans taken out for
a specific period, during which the
consumer is required to make regular
payments. In loans like this, when an
asset is being financed, the issuing
institution usually retains some
ownership rights over it, the as a
means of guaranteeing repayment.
For example, if a customer fails to
repay an auto loan, the bank may
seize the vehicle as compensation if a
person defaults.

12. FINANCIAL CARDS
• CREDIT CARD: PROVIDES REVOLVING CREDIT. WHICHMEANS ITIS LIKEA LOAN, THATYOU PAY INTEREST ON EACHMONTH
THATIT ISN’T PAID IN FULL. THELONGER YOU CARRYA BALANCEON THECARD, THEMORE YOU PAYIN INTEREST.
• DEBIT CARD: A PAYMENT CARD THATDEDUCTS MONEY DIRECTLYFROM ACONSUMER’S CHECKING ACCOUNT TO PAY FOR A
PURCHASE.
• STORE CREDIT CARD: SIMPLY A CREDIT CARD THATCAN ONLY BE USED IN A SPECIFIC STORE OR STORE GROUP. DO NOT
CONFUSE STORE CARDS WITHLOYALTYCARDS, WHICH ARE CARDS THATALLOWYOU TO COLLECTPOINTS WHEN YOU SPEND
IN APARTICULARSTORE. UNLIKELOYALTYCARDS, STORE CARDS ALLOWYOU TO BORROW MONEY. MAKENO MISTAKE, IF YOU
ARE NOT CAREFUL STORE CARDS CAN MEAN ONLY ONE THING - HIGH INTEREST DEBT!