leasson 1 Flashcards
(12 cards)
is an act of trading goods or services between two or more parties without the use of money —or a
monetary medium, such as a credit card.
barter
10 Reasons Why Money Is Important
- Money transformed the world
- Money can lead to better goods and services
- Money is linked to happiness
- Money frees you from working to survive
- Money pays for more life experiences
- Money helps families support each other
- Money reduces financial stress
- Money can strengthen communities
- Having money helps you make money
- Who has money (and who doesn’t) determines violence money helps you make money
most commonly refers to a contractual
agreement in which a borrower receives a sum of money or something else of value and commits to repaying
the lender at a later date, typically with interest.
credit
represents an agreement between a creditor (lender) and a borrower (debtor).
credit
promises to repay the lender, often with interest, or risk financial or legal penalties.
debtor
is a letter from a bank guaranteeing that a seller will
receive the full amount that is due from a buyer by a certain agreed-upon date.
Letter of Credit
represents the maximum amount of credit that a lender (such as a credit card company) will
extend
credit limit
refers to a loan from a bank or other financial institution that makes a certain amount of credit available to the borrower for them to draw on as needed,
line of credit
is a preset borrowing limit that can be tapped into at any time. The borrower can
take money out as needed until the limit is reached.
line of credit (LOC)
Advantages of credit card
- Credit card is convenient.
- Responsible for building financial health
- Flexible credit
- Protect from theft
- Cheap currency conversion
- Purchase protection
- Teaching kids financial literacy
- Extended warranties
- Provide discounts, incentives, and offers
- Keep a record of expenses.
- Building a line of record’
- Credit cards provide affordable EMI facilities.
- No need to carry cash
- Car rental insurance
- The CARD Act
- It is easy to access
Disadvantages of Credit Cards
- Temptation to Overspend
- Accumulating Debt
- High Interest Rates
- Annual Fees
- Potential for Theft or Fraud
- Careful Monitoring Required
- Late Fees
- Complex Terms
- Potential for Harm to Your Credit Score
- Reduced Discretionary Income
involves a loan with no fixed end date—a credit card account being a good example.
Revolving credit
