Types of Credit Vocab

Collateral

• A type of insurance for loans.

• Something valuable that the lender can take as payment if you can't or don't repay your secured loan.

• A government program to assist borrowers.

• A fee charged by lenders for processing a loan.

Adjustable-Rate Mortgage (ARM)

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

• A mortgage that adjusts its interest rate periodically after an initial fixed period.

• A type of mortgage that has no interest rate.

• A mortgage that is only available for commercial properties.

Introductory APR

• The standard interest rate applied to all credit accounts.

• The typically low rate charged during the introductory period after a credit account is opened, after which the regular, typically higher, APR will apply.

• A fee charged for late payments on a credit account.

• The rate that applies to cash advances on a credit card.

Direct Unsubsidized Loan

• A federal student loan available to undergraduate and graduate students; the student is responsible for paying the interest during the time they are in school.

• A type of loan that does not require repayment until after graduation.

• A loan that is only available to graduate students with financial need.

• A federal loan that covers all educational expenses without any interest charges.

Fixed-Rate Loan

• A loan with an interest rate that does not change over the life of the loan.

• A loan that has a variable interest rate that can change periodically.

• A loan that is secured by collateral, such as a house or car.

• A loan that must be paid back within a year.

Crowdfunding

• The practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the Internet.

• A method of investing in stocks and bonds through a broker.

• A way to collect donations for charitable causes without any specific project.

• A technique used by banks to lend money to individuals with high credit scores.

Revolving Credit

• A fixed loan amount that must be repaid in installments.

• An open line of credit that can be used for any purchases as long as you are under the limit; its payments vary monthly based on size of the debt.

• A type of credit that requires collateral to secure the loan.

• A credit card that can only be used for specific purchases.

Charge Card

• A type of credit card that allows you to carry a balance with interest.

• A special type of credit card with no interest because you must pay the balance in full each month.

• A debit card that can only be used for online purchases.

• A credit card that offers rewards for every purchase made.

Credit Limit

• The minimum amount that must be paid on a credit card.

• The maximum amount that may be borrowed on a credit card.

• The interest rate applied to the outstanding balance.

• The fee charged for late payments.

Statement

• A monthly record of your account transactions provided by your credit card company electronically or on paper.

• A summary of your credit score and history.

• A list of all the credit cards you own.

• A document detailing your loan agreements and terms.