Terminology Review 5 - Types of Credit

What is an Adjustable-Rate Mortgage (ARM)?

• A mortgage with a fixed interest rate for the entire term

• A mortgage with an interest rate that changes periodically

• A loan from a retirement savings account

• A credit card with a fixed annual fee

What is a 401(k) Loan?

• A loan from a retirement savings account

• A loan with a fixed interest rate

• A type of credit card fee

• A method of paying off debt in installments

What does Amortization refer to?

• A yearly fee for using a credit card

• The act of transferring debt between credit cards

• Paying off debt over time in equal installments

• A service allowing cash withdrawal from credit cards

What is an Annual Fee in terms of credit cards?

• A fee for transferring balances

• A yearly fee for having a specific credit card

• A fee for withdrawing cash from a credit card

• A fee for using another person's credit card

What does Annual Percentage Rate (APR) represent?

• The cost of borrowing money each year as a percentage

• The fee for transferring a balance

• The interest rate on a savings account

• The fee for using a credit card abroad

Who is an Authorized User on a credit card?

• A person legally responsible for paying the credit card bill

• A person who can use the card but isn't responsible for the bill

• A person who can transfer balances between cards

• A person who can withdraw cash from the card

What is a Balance Transfer?

• A fee for using a credit card

• The act of transferring debt from one credit card to another

• A method of paying off debt in installments

• A service allowing cash withdrawal from credit cards

What is a Cash Advance?

• A fee for transferring a balance

• A service allowing cash withdrawal from a credit card

• A yearly fee for having a specific credit card

• A loan from a retirement savings account

What is a charge card?

• A card that allows you to make purchases with borrowed money

• A special type of credit card with no interest, requiring full monthly payment

• A card that offers reward points for purchases

• A card that combines multiple loans into one

What is collateral in the context of loans?

• A type of credit card with no interest

• A legal document outlining credit card terms

• Something valuable that can be taken if a loan is not repaid

• A nonprofit financial institution owned by its members