Ch. 5 Flashcards
(26 cards)
Annual percentage rate (APR)
The standardized annual cost of credit, including all mandatory fees paid by the borrower, expressed as a percentage rate.
Average daily balance
The average of the balances owed on each day of the billing cycle.
Bank credit card
A credit card issued by a depository institution.
Billing date
The last day of a billing cycle. Credit card transactions made after the billing date appear on the next months bill.
Cash advance
A cash loan from a credit card account.
Closed-end credit
Loans for a specific purpose paid back in a specified period of time, usually with monthly payments.
Consumer credit
Credit used for personal needs other than home purchases.
Convenience check
A check supplied by a credit card lender for the purpose of making a cash advance.
Cosigner
A person who agrees to take responsibility for repayment of a loan if the primary borrower defaults.
Credit
An arraignment to receive cash, goods, or services now and pay later.
Credit bureau
A company that collects credit information on individuals and provides reports to interested lenders.
Credit limit
The preapproved maximum amount of borrowing for an open-end credit account. Also known as a credit line.
Due date
The date by which payment must be received by the lender if the account holder is to avoid late penalties and, in some cases, interest on new transactions.
Electronic cash
Money in digitized format.
Finance charge
The dollar amount of periodic interest charged by a lender on a credit account.
Grace period
The time before interest begins to accrue on new transactions.
Late payment penalty
A penalty fee charged to an account for making a payment after the due date.
Minimum payment
The minimum amount that must be paid by the due date to maintain good credit standing and avoid late payment penalties.
Open-end credit
Preapproved continuous loans that can cover many purchases and usually requires monthly partial payments. Also known as revolving credit.
Overlimit charge
A penalty fee charged to an account for exceeding the credit limit.
Periodic rate
The stated rate divided by the number of billing periods per year.
Retail credit card
A credit card that can be used only at the sponsoring retailer’s outlets.
Smart card
A card that stores identification and electronic cash in a computer chip.
Travel and entertainment (T&E) card
A credit card that requires payment of the full balance each billing cycle.
