Introduction To Credit Personal Finance. What is Credit? Money borrowed to buy something now, with the agreement to pay later.

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Presentation transcript:

Introduction To Credit Personal Finance

What is Credit? Money borrowed to buy something now, with the agreement to pay later.

Credit Vocabulary Debtor PPerson who borrows money. Creditor PPerson who loans the money. Capital UUsed to qualify for credit. Personal property. Collateral PProperty pledged to assure repayment.

Money Side of Credit Principal  Amount borrowed Interest  Money charged for loan. Annual Percentage Rate (APR)  The cost of credit, expressed as a yearly percentage.

Types of Credit -Open-Ended Credit- Open 30 Day  Full balance paid each month. Revolving Credit  Borrower can pay all or some of the balance.  Must pay minimum.

Types of Credit Closed-End Credit  Loan for a specific amount of money and time. Service Credit  Use of a service now, pay for it later.  Examples: Utilities Doctors Hospitals Dry Cleaner

Assignment Page  Review Facts – # 5, 6, 12, 13  Apply Your Knowledge – # 5, 6  Solve Problems - # 4