Glossary Terms:

Credit for Beginners

Glossary terms from:
http://www.econedlink.org/e326


Annual Fee

The yearly charge for having a credit card or credit account.

Borrower

An individual who has received and used something belonging to somebody else, with the intention of returning or repaying it--often with interest in the case of borrowed money.

Cash

Money in the form of paper currency or coins (as distinct from checks, money orders or credit).

Cash Advance

In a credit arrangement, the amount charged to a borrower's account for cash received; an instant loan.

Collateral

Something of value (often a house or a car) pledged by a borrower as security for a loan. If the borrower fails to make payments on the loan, the collateral may be sold; proceeds from the sale may then be used to pay down the unpaid debt.

Consumers

People who use goods and services to satisfy their personal needs and not for resale or in the production of other goods and services.

Credit

The opportunity to borrow money or to receive goods or services in return for a promise to pay later.

Credit Card

A small, specially coded plastic card issued by a bank, business, etc., authorizing the cardholder to purchase goods or services on credit.

Credit Limit

The maximum amount of money that will be extended to a person by a financial institution or credit-card issuer.

Credit Rating

An evaluation of a borrower's ability to repay a loan based on his or her character, capacity and capital.

Finance Charge

The total cost of credit, including interest and transaction fees.

Goods

Tangible objects that satisfy economic wants.

Grace Period

A period of time allowed for payment of money owed; after the grace period has elapsed, interest may be charged.

Income

Payments earned by households for selling or renting their productive resources. May include salaries, wages, interest and dividends.

Interest

Money paid regularly, at a particular rate, for the use of borrowed money.

Interest Rate

The price paid for using someone else's money, expressed as a percentage of the amount borrowed.

Lend

To grant someone the use of something, on condition that the object borrowed or its equivalent will be returned (often with interest, in the case of money).

Minimum Payment

In a credit arrangement, the lowest amount that a borrower must pay toward the credit balance each month in order to avoid a penalty.

Money

Anything that is generally accepted as final payment for goods and services; serves as a medium of exchange, a store of value and a standard of value. Characteristics of money are portability, stability in value, uniformity, durability and acceptance.

Savings Account

An interest-bearing account (passbook or statement) at a financial institution.

Services

Activities performed by people, firms or government agencies to satisfy economic wants.

Work

Effort applied to achieve a purpose or result, often for pay; skills and knowledge put to use to get something done; employment at a job or in a position; occupation, profession, business, trade, craft, etc.