1. Credit

2. 1.Credit – An agreement to pay for current purchases some time in the future. 2.Finance charge – The total amount of money paid for a credit purchase. 3.Interest – The basic amount charged for the use of credit.

3. 4.Adjusted balance method – The creditor considers ALL payments you have made since the billing period began. 5.Average daily balance method – The creditor adds your daily balances and divides them by the number of days in the billing period.

4. 6.Previous balance method – The creditor does NOT consider any payments you make after the billing period begins. 7.APR – The rate of interest paid for the yearly use of credit. (Annual Percentage Rate)

5. 8.Credit bureau – A company that gathers credit information on consumers and shares information with creditors. 9.Credit rating – A history of a person’s credit accounts. 10. Cosigner – A person who agrees to repay a loan if a borrower cannot.

6. 11. Regular charge account – A credit account that requires full payment within 30 days for charge purchases. 12. Revolving charge account – A credit account that allows partial payments on charge purchases but charges interest on unpaid balances.

7. 13.Credit card – A plastic device issued by a creditor to authorize charge purchases.

8. 14.Conditional sales contract – A type of installment credit that requires a buyer to completely pay for the product before receiving legal ownership. 15.Installment credit – Any type of credit in which the balance is paid in regular payments at set intervals rather than one payment.

9. 16.Collateral – The property pledged as security in case payments are not made.

10. 17.Prepayment clause – Outlines what will happen if you make payments before they are due. Some allow you to benefit; others fine you. 18.Add-on clause – Specifies that any new installment purchase you make will be added to your original contract.

11. 19.Balloon clause – Indicates that your final payment will be much larger than earlier payments. 20.Acceleration clause – States that the creditor can demand all remaining payments if you miss a payment.

12. 21.Lien clause – States that the creditor can take your collateral if you cannot make your payments. 22.Wage-assignment clause – Indicates that your creditor can collect a certain percentage of your salary to make payments.

13. 23.Promissory note – A written promise to repay the total sum owed under the conditions specified. 24.Cash loan – The amount of money borrowed for a specific purpose.

14. 25.Consolidation loan – A combination of many existing debts into one total debt. 26.Debt – The amount of money owed to a creditor.

15. 27.Default – Not making payments when they are due. 28.Bankruptcy – A procedure that forces a person who is deeply in debt to allow most of his or her assets to be sold at a public auction.