2. I. What is Credit Credit #1 nAnA. To receive funds for goods with the intent to________ _______ _______ nBnB. _________________is the amount originally borrowed, nCnC. _____________is amount added on for the privilege of borrowing

3. II. Installment Debt Credit #2 nAnA. A loan paid back in _______________payments over time nBnB. Used for purchase of durable goods that last over_________ __________ nCnC. _______________payback periods but higher interest nDnD. ________________Mortgag es are most popular

4. III. Why People Use Credit nAnA. To satisfy an _______________need nBnB. To avoid the_______________ nCnC. To spread payments out over a products________________ _

5. IV. Deciding to Use Credit nAnA. Consider the ________________of having product now nBnB. Consider costs of interest and inability to buy other items nCnC. Consider other benefits like ______ ______________ and frequent flyer miles

6. Who gives Loans n Commercial Banks-offer savings and checking accounts and give the __________loans n Savings Banks-like commercial banks-interest is __________than banks n Credit Unions-are _____________by its members and offer the cheapest loans available n Finance Companies-takes over installment debt for retailers-offer the _____________interest

7. Charge Accounts n Regular Charge Accounts –30 day charge-must be paid at __________of the month –If not interest is charged –______________can be charged until balance is paid n Revolving Charge Accounts –may make ___________charges without paying balance –must just make__________ _________ –interest charges for balance not paid

8. Charge Accounts 2 n Credit Cards –both regular and revolving –have credit limit

9. Finance Charges n Finance charges- _______ _____ ____________expressed in dollars and cents n includes ________________fees n calculated by Previous, Adjusted, Average and Past Due Balance Methods

10. Annual Percentage Rate n cost of credit expressed in a__________ __________

11. Computing Finance Charges n page 93 n Problem Beginning Balance of $500 n Interest rate of 12% apr –Monthly is 12/12 = 1% –MPR 1% n payment made halfway through the month of $100 –Previous Method Beginning Balance 500 x.01 = $5 Finance Charge

12. Adjusted Method-Ending Balance n $500 – 100 = $ 400 n 400 x.01 = $4 Finance Charge

13. Average Method n 500 x 15 =7500 n 400 x 15 =6000 n =13500/30 = 450 n 450 x 1% = $4.50 n Find the monthly finance charge –for previous, adjusted and average daily balance methods

14. Finance Charge Problem n Beginning Balance of $200 n Interest rate of 18% annual percentage rate 1.5% monthly n Payment made halfway of $100 n find the monthly finance charge

15. Finance Charge Quiz n Beginning Balance of $400 n Interest rate of 24% n Payment made of halfway of $100 n find the monthly finance charge

16. n Previous 400 x.02 = $8 n Adjusted 400-100=300 300 x.02 = $6 Average 350 x.02 = $7

17. Finance Charge Quiz n APR 12% MPR 1% n Beginning Balance $200 $100 payment made halfway through the month For you smart ones-for Average only $50 payment 1/3 through the month $50 payment made 2/3 through the month