Module 7
Objectives
Upon completion of this module, you will be able to:
1. describe installment credit, noninstallment credit, and open-ended credit
2. define different credit card terms such as cash advance, balance transfer,
introductory rate, grace period, and minimum payment
3. define a secured credit card
4. explain how the average daily balance is used in calculating the finance charge
5. recognize the difference between a secured and an unsecured loan
6. define an acceleration clause and a prepayment penalty
7. describe the difference between a fixed interest rate and a variable interest rate
Explain the difference between a regular revolving charge account, a travel and entertainment
card, and a secured credit card.
Define the following:
Consumer credit
Installment credit
Non-installment credit
Open-ended credit
Credit limit
Grace period
List some characteristics of the following:
Teaser rates
Cash advances
Convenience checks
Balance transfers
List some credit card fees
When does a grace period save interest?
What is the main problem with just paying the minimum payment on a credit card?
When does default occur?
List steps to correctly close a credit card.
Define the following:
Secured loan
Unsecured loan
Acceleration clause
Balloon payment
Prepayment penalty
Deficiency balance
What are some pros and cons of debt consolidation loans?
List some financing options for student loans.