Credit Management

What is credit?

• Money to purchase things you need or want

• Money borrowed to use or buy

  something now, with an agreement to

  pay later

• Money borrowed that doesn't have to paid back

• A gift of money

Who is a debtor?

• Person who gives money to a friend or relative

• Person who loans money or extends credit

• Person who borrows or uses credit

• Person who borrows someone else's credit card

Who is a creditor?

• Person who borrows money or uses credit

• Person who uses someone's credit card

• Person who gives money to a friend, as a gift.

• Person who loans money or extends credit

What is collateral?

• Property used to ensure repayment of a loan.

• A corporate ladder

• Property given to someone as a gift.

• Property worth more than your debt.

What is principal?

• Mr. Travis

• Amount a piece of property is worth

• Amount of money borrowed (loan amount).

• Amount of money extended as credit

How do you calculate the balance due?

• Finance Charge + Capital = Balance Due

• Principal + Finance Charge = Balance Due

• Finance Charge + Interest

• Principal + Collateral + Capital

What's included on a credit card statement?

• Minimum payment, late fee, & due date

• Maximum payment & due date

• Maximum payment and finance charge

• Minimum payment & collateral

What is open ended credit?

• After you pay the balance, you CANNOT borrow money again

• installment loans – car loans, mortgages

• A loan for a specific amount that must be paid

  back in full (principal + finance charges) by a set

  due date

• An ongoing agreement that allows a person to borrow money

  up to a certain amount (the credit limit)

What are examples of closed credit?

• installment loans: car loans, mortgages

  (home loans)

• Credit Cards

• Debit Cards

• Gift of money from a grandparent

What is service credit?

• Same as closed credit

• A service is performed with the

  agreement you will pay for it later

  Examples: Utilities, Medical/Dental bills

• Credit cards

• Same as open credit