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Flashcards in Banking vocabulary Deck (47):
1

529 plan

qualified tuition plan that provides families a federal tax-free way to save money for college.

2

APR

this stands for annual percentage rate/ which is a number calculated by taking into account the total cost of the loan/ including what the borrower will pay in interest. this makes it easier to compare different loan offers

3

asset transformation

process of risk sharing through which risky assets are turned into safer assets for investors

4

adverse selection

A high-risk person benefits more from insurance/ so is more likely to purchase it.

5

moral hazard

the loss to an insurance company resulting from possible lack of prudence or honesty on the part of policyholders

6

credit rationing

the restricting of credit by lenders such that borrowers cannot obtain the funds they desire at the given interest rate

7

installment loans

loans repaid in regular payments over a period of time

8

secured loan

a loan backed by something valuable/ such as property

9

collateral

a security pledged for the repayment of a loan

10

lien

the right to take another's property if an obligation is not discharged

11

unsecured loan

A loan made on the signature and credit of the borrower/ not secured by collateral. Credit card. (Debenture)

12

open-end loan

A mortgage loan that is expandable by increments up a maximum dollar amount/ the full loan being secured by the same original mortgage

13

grace period

a time period during which no finance charges will be added to your account

14

capital gain

the amount by which the selling price of an asset exceeds the purchase price

15

capital loss

the amount by which the purchase price of an asset exceeds the selling price

16

cash flow

the excess of cash revenues over cash outlays in a give period of time (not including non-cash expenses)

17

annual fee

An amount that credit card companies can charge for the use of a credit card.

18

annual percentage rate

the total cost of credit expressed as a yearly percentage

19

bad credit

a situation in which lenders believe that/ due to a borrowers poor history of repaying his or her debts/ further loans to this person would be especially risky.

20

bankruptcy

a legal process intended to insure equality among the creditors of a corporation declared in bankruptcy

21

capacity

the maximum production possible

22

capital

wealth in the form of money or property owned by a person or business and human resources of economic value

23

cardholder agreement

a written contract that sets forth the terms that apply to a credit or charge card account/ including the interest rate charged/ the method of calculating interest and any annual or transaction fees

24

character

the inherent complex of attributes that determine a persons moral and ethical actions and reactions

25

collateral

a security pledged for the repayment of a loan

26

collection agency

An organization that obtains or arranges for payment of money owed to a third party

27

conditions

Circumstances that affect a situation

28

credit

an accounting entry acknowledging income or capital items

29

credit report

a report on a person's creditworthiness that includes identifying information/ credit cards/ late payments/ bankruptcies/ and savings balances

30

equal credit opportunity

unlawful to discriminate because of sex or marital status

31

foreclosure rescue

try to make people sign off on their foreclosed homes

32

establishing credit

Even if one spouse has good credit established/ then it's still important for the other spouse to establish credit in their own name.

33

fees

Service fees for use of the checking account/ built into the service agreement.

34

finance charge

is the total dollar amount you pay to use credit.

35

good credit

a situation in which lenders are willing to make loans to an individual/ due to his or her good history of repaying debts.

36

guarantee

a written assurance that some product or service will be provided or will meet certain specifications

37

installment credit

a loan repaid with interest in equal periodic payments

38

installment loan

a loan repaid with interest in equal periodic payments

39

late fees

Additional fees that can be added to a credit card bill if the card holder fails to make at least the minimum payment by the due date.

40

lender

someone who lends money or gives credit in business matters

41

net worth

total assets minus total liabilities

42

required payment

least amount of money needed to be paid for loans

43

revolving credit

a consumer credit line that can be used up to a certain limit or paid down at any time

44

secured credit card

a credit card that requires you to make a deposit to the card issuer/ credit limit is typically the amount of your deposit/ often $500

45

spending limit

refund of the purchase price of an item.

46

term

a limited period of time

47

unpaid balance

the amount of a loan that has not yet been paid