credit and loans what do i need to know? credit card revolving access to a fixed sum of money...
TRANSCRIPT
Credit and loans
What do I need to know?Credit card • revolving access to a fixed sum of
money
…revolving…?• you can spend up to your credit line• whatever gets paid back monthly is
available again…credit line?• amount of credit you can use
….it’s gonna cost ya….
interest• money you pay to use credit or borrow
money
APR = annual percentage rate• rate at which interest is calculated
finance charge• interest charged on the amount you owe
…..and cost ya…..annual fee• once-yearly charge for using a credit card
late payment fee• (snooze, you lose) – usually about $25
over the limit fee• charged if you exceed your credit line
…yes, there’s more….
cash advance fee• charged for withdrawal of cash cash advances usually carry high interest
rates!!
grace period• time between when you’re billed and the
due date (3-4 weeks)
your interest rate can go up if you’re late or exceed credit line!!
……what about loans?
loan• borrow a lump sum of money and pay back over
timeloan note• detailed loan agreement between lender & borrower• READ the fine print before you sign!!!
principal• amount borrowed
term• length of time to repay the loan
….and…….secured loan• borrower puts up collateral to guarantee loan• …and if you don’t pay it back…say bye, bye!!
Unsecured loan• No collateral
fixed rate• interest and monthly payments stay the same
for the term of the loanvariable or adjustable rate• interest rate changes during the loan term
…so….is credit a good thing or a bad thing…??
Benefits….• you can get stuff you don’t have the
money for!! duh!!• good for emergencies – for things you
need – if you know you can pay for over time
Dangers…• you don’t have the money to pay for the
stuff you bought! …again…duh!!• DEBT!!!