Flashcards
Key Terms for Chapter 14
Cards in this deck (17)
- 1AmortizationProcess of paying back a loan (principal + interest) by equal periodic payments
- 2Amount FinancedCash price - down payment
- 3Annual Percentage Rate (APR)True or effective annual interest rate charged by sellers. Required to be stated by Truth in Lending Act
- 4Average Daily BalanceSum of daily balances divided by number of days in billing cycle
- 5Cash AdvanceMoney borrowed by holder of a credit card. It is recorded as another purchase and is used in the calculation of the average daily balance
- 6Daily BalanceCalculated to determine customer's finance charge: Previous Balance + Any Cash Advances + Purchases - Payments
- 7Deferred Payment PriceTotal of all monthly payments + down payment
- 8Down PaymentAmount of initial cash payment made when an item is purchased
- 9Fair Credit and Charge Card Disclosure Act of 1988Act that tightens controls on credit card companies soliciting new business
- 10Finance ChargeTotal payments - Actual loan cost
- 11Installment LoanLoan paid off with a series of equal periodic payments
- 12Loan Amortization TableTable used to calculate monthly payments
- 13Open-End CreditSet payment period. Also, additional credit amounts can be added up to a set limit. It is a revolving charge account
- 14Outstanding BalanceAmount left to be paid on a loan
- 15Revolving Charge AccountCharges for a customer are allowed up to a specific maximum, a minimum monthly payment is required, and interest is charged on balance outstanding
- 16Truth in Lending ActFederal law that requires sellers to inform buyers, in writing, of (1) the finance charge and (2) the annual percentage rate. The law doesn't dictate what can be charged
- 17—
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- Chapter 14 Key Terms of "Practical Business Math Procedures" by Jeffrey Slater
- Created by
- Laura Samuelson
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