Unit 5: Credit - Types of Credit

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Credit Card

Back

A small plastic card issued by a bank and/or business that allows the holder to use it to purchase goods or services on credit.

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Collateral Assets

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An asset that is accepted for a loan.

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Consumer Credit

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Debt that is accrued by an individual to purchase goods and services.

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Commercial Credit

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Credit given to a business entity to facilitate commercial transactions. Commonly referred to as commercial financing.

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Regular Charge Account

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An account that gives consumers a line of credit to purchase goods or services. Specific terms, such as credit limit, payment terms and interest rates are applied.

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Revolving Charge Account

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A type of account that provides borrowers with a predetermined maximum credit limit and allows for flexible credit availability and payment terms.

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Annual Fee

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The yearly fee charged for holding a credit card. You pay this whether you carry a balance or not.

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Annual Percentage Rate (APR)

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The interest rate you are charged if you do not pay off your credit card balance in full each billing cycle.

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Balance

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The amount of money you owe on your credit card bill.

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Balance Transfer

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Taking debt from one credit card and moving it to a new card. This is usually done because the new card has a lower APR.