Credit vocab and calculating monthly payments

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What is a credit card?

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A credit card is a payment card that allows the cardholder to borrow funds from a pre-approved limit to pay for goods and services, with the obligation to repay the borrowed amount plus any applicable interest.

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What is a debit card?

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A debit card is a payment card that deducts money directly from the cardholder's checking account to pay for purchases, rather than borrowing money.

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What should you do if your credit or debit card is lost or stolen?

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You should report it immediately to the card issuer to prevent unauthorized transactions.

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What is a Personal Identification Number (PIN)?

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A PIN is a numeric code used to authenticate the identity of the cardholder when using a debit card or certain credit cards.

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What does APR stand for, and why is it important?

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APR stands for Annual Percentage Rate, and it represents the yearly interest rate charged on borrowed money, which is important for understanding the cost of loans.

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How do you calculate the total amount paid on a loan?

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To calculate the total amount paid on a loan, you can use the formula: Total Payment = Principal + (Principal x Interest Rate x Time).

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What is the difference between a credit card and a debit card?

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A credit card allows you to borrow money up to a limit, while a debit card withdraws money directly from your bank account.

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What is the significance of reporting a lost or stolen card?

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Reporting a lost or stolen card is crucial to prevent unauthorized use and potential financial loss.

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What factors can affect the total cost of a loan?

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Factors include the principal amount, interest rate, loan term, and any additional fees.

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What is the typical use case for a debit card?

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A debit card is typically used for everyday purchases, where funds are directly withdrawn from the user's bank account.