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Credit
Definitions H to Z:
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Household Income: The total amount
of income of all the members in a household. It includes wages and
salary, bonuses and commissions, child support, parental support,
Social Security, retirement funds, unemployment, disability funds, and
dividends.
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Individual Credit: Credit based on
all of your incomes, assets and credit history.
Installment Loan: A
loan that a person promises to pay back in fixed, scheduled payments
over a specific period of time. In addition to the original amount
borrowed, interest is paid - a fee for the use of the lender's money.
Student loans, home equity loans and auto loans are usually
installment loans.
Interest Rate: A fee that
is charged
for money lent
from a creditor.
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Joint Credit: Credit
based on the total
income,
assets
and credit histories
of
both people who
are
applying.
Spouses
combining
resources may be
able to
get a higher line of credit.
When a parent co-signs for their child's student credit card, it
increases both the chance of that student getting the card as well as
receiving a higher credit limit. It
also means that both
parties ( student and parent <or> man and wife)
are responsible for paying off the credit
debt.
If one person fails to pay
on
a joint credit
account,
the creditor can demand
payment from the other person
who signed, even
if you are separated or divorced.
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Late Payment: A
payment that is "received"
after the due date
on the statement.
Late Payment Fee: Fee
charged when a payment is "received"
after the due date.
Legal Judgment: A
court decision that requires
a person to do something, such as pay off a
debt to a creditor.
Liability:
Anything
that is owed and must be repaid at some point in the future. A liability
may be due immediately (such as an electric bill) or may be more long
term and be paid off over several months or years (such as a mortgage or
student loan). The opposite of a liability is an Asset.
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Minimum Monthly Payment/Amount Due:
The smallest amount that can be paid by
the due date and still meet the terms of the cardholder agreement. See
also Balance/Amount I Owe.
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Outstanding Balance: The
total amount owed on a credit card or other loan.
Over-the-Credit-Limit:
When
the amount owed is greater than the limit on a credit line. Any
combination of purchases, cash advances, fees or finance charges may
cause an individual to exceed their credit limit.
Over-the-Limit Fee: A
fee charged for exceeding the total credit limit on a credit card or
line of credit.
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Past Due: The
status an account reaches when the "minimum payment" was not received
by the due date on the credit or loan statement.
Periodic Rate: The
interest rate described in relation to a specific amount of time. For
example, the monthly periodic rate is the cost of credit per month; the
daily periodic rate is the cost of credit per day.
Posting Date: The date that a
purchase, cash advance or payment is actually recorded on an account.
Usually within 48 hours of the creditor receiving payment.
Pre-payment: When
a portion or the entire amount of the principal of a credit line or loan
is paid before it is due in full. This often reduces the total amount of
interest paid on a credit line or loan.
Previous Balance: The
total balance that is due at the end of the PREVIOUS billing cycle.
Prime Rate: Interest
rate that is monitored
by the Federal Reserve.
It is the
base interest rate on "corporate
loans"
posted by at least 75% of the 30 largest banks
in the United States.
Principal: The
portion of a loan that represents the actual amount of money borrowed.
It does not include interest. With credit cards, the "principal"
represents the "price of purchased items" or the actual amount
of the cash advance.
Promissory Note:
A legal document a person signs to obtain a loan or line of credit.
It lists terms and agreements of the loan, including how and when the
loan will be repaid.
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Quarterly:
Four times a year (Every 4 months).
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Revolving Credit: A
credit agreement that allows consumers to pay all or part of the
outstanding balance on a loan or credit card. As the balance is paid
off, credit becomes available again to use for another purchase or cash
advance.
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Secured Card: A
credit card that is "guaranteed" by a cash deposit which held
in a special savings account or c.d.. The credit line on the secured
card often equals the amount of the deposit. If a cardholder defaults on
payments, the card issuer will apply the deposit toward the outstanding
balance due.
Secured Debt: Debt for which
repayment is guaranteed through collateral - property of equal or
greater value than the amount of the loan. If the loan is not repaid,
the issuer may take possession of the collateral. Collateral may be an
asset such as a car or a home or, in the case of a secured credit
card, a cash deposit held by the issuer. For example, a mortgage is a
secured debt in which the home is collateral. If the person fails to
repay the loan, the bank may take the home as payment.
NOTE: for student credit cards and credit and debt education, visit
student credit cards
to compare the best student credit card issuers before applying
online.
Semi-Annually: Twice a year (Every
6 months).
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Transaction Date: The actual date
when something is purchased or when cash is withdrawn.
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Unsecured Credit Card, Unsecured Debt:
Debt that is not guaranteed by any collateral. No assets are
committed in the event of a loan or credit default. If the
creditor/loan issuer is unable to collect its value is lost. Most
credit cards are unsecured.
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Variable Expenses: Expenses that
can change from month to month, including but not limited to
necessities that can be decreased (food and utilities) and
non-essentials that can be eliminated (cel phones, long distance,
cable, dsl service, subscriptions, etc). Reducing variable expenses is
a good first step in getting control of your finances.
Variable Interest Rate: An interest
rate that changes, usually based on the "prime rate." Variable
rate credit cards often have an interest rate like "prime + 5.9%,"
which means the interest on the card is "prime rate"
plus an additional 5.9%.
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Zero Balance:
When the total outstanding balance of a
credit line is paid in full. It means NO money is owed to the
credit card company.
>CONTINUE
TO >PART
5
of our CREDIT SECTION.
Schoolwork
Financial Pages:
Student Loans 1> 2
>3 >4
: Credit
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>3
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>5
: Loan
Consolidation 1> 2
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