Credit Fundamentals

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Fundamental definition of credit

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Money that a lender loans to a borrower with an agreement to repay

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How credit card companies primarily generate revenue

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Through multiple revenue streams including merchant fees, interest charges, and penalties

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Potential danger of credit card usage for consumers

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Extremely high interest rates

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Typical range of annual percentage rates (APR) for credit cards

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15-25%

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Definition of creditworthiness

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How 'worthy' you are to be lent money

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Three major credit bureaus

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Equifax, Experian, TransUnion

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Level of government that imposes sales tax

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State government

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Redistribution in the context of taxation

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Sending money from those who have it to those who need it

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Tax credit

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A direct decrease in taxes owed

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NOT typically considered an inflow in a personal cash flow statement

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Credit card debt