Glossary Terms:

Q T Pi Fashions - Learning About Credit Card Use

Glossary terms from:
http://www.econedlink.org/e346


Annual Fee

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

Annual Percentage Rate (APR)

The percentage of the principal of a loan to be paid as interest in one year. Differs from an add-on rate in that an APR is calculated on the declining balance of the loan. The Truth in Lending Act requires lenders to disclose APRs to prospective borrowers.

Balance Sheet

An itemized statement listing the total assets and total liabilities of a given business to portray its net worth at a given moment in time.

Character

In the context of credit transactions, character is one of the Three Cs of Credit. It is an indicator of how creditworthy a prospective borrower is likely to be, as determined by the borrower's handling of past debts and his or her stability in jobs and residences.

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.

Debt

Money owed to someone else. Also the state or condition of owing money. Can be individual, corporate or government debt.

Goods

Tangible objects that satisfy economic wants.

Incentive

Any reward or benefit, such as money, advantage or good feeling, that motivates people to do something.

Interest

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

Purchases

In a credit arrangement, the total amount spent during the billing cycle.

Return

Earnings from an investment, usually expressed as an annual percentage.

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.