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NGPF Types of Credit – Here’s Answers Key
Here, we are going to share all quiz answer keys for the topic NGPF Types of Credit:
- Question: Credit
Answer: Any arrangement where you obtain “stuff” (money, items, services), and agree to pay for it in the future.
- Question: Loan
Answer: An agreement where you are credited with a fixed amount of money for a fixed period of time, usually with interest.
- Question: Interest Rate
Answer: The percentage charged for the privilege of borrowing money.
- Question: Principal
Answer: The amount you borrow.
- Question: Term
Answer: The amount of time you must repay your principal.
- Question: Collateral
Answer: Something valuable that the lender is able to take as payment if you cannot pay back your loan (like a home or car).
- Question: Co-signer
Answer: Someone who legally agrees to take responsibility for a debt of a person if they cannot repay it.
- Question: Secured debt
Answer: Debt is tied to a specific tangible asset which can be used as collateral and repossessed if payments are not made.
- Question: Unsecured debt
Answer: Debit not tied to a specific asset or that cannot be repossessed if the payments are not made.
- Question: Variable-rate loan
Answer: The interest rate is able to change, based on the prime rate or index rate, over the course of the loan.
- Question: Fixed-rate loan
Answer: For this kind of loan, the interest rate is determined before a loan is granted and remains constant as long as on-time payments are being created.
- Question: Amortization
Answer: The paying off of debt with a fixed repayment schedule in regular installments over a period of time.
- Question: Debit Card
Answer: A payment card which deducts money directly from a consumer’s checking account to pay for a purchase. Unlike the credit cards, they do not allow the user to go into debt, except probably for small negative balances which might be incurred if the account holder has signed up for overdraft coverage.
- Question: Credit Card
Answer: A card issued by a financial company that gives the holder a choice or ability to borrow funds. They charge interest and are mainly used for short-term financing. Usually, interest begins one month after a purchase is created. And the limit of borrowing is pre-set according to the rating of the individual credit.
- Question: Schumer Box
Answer: A table which appears in credit card agreements shows basic information about the rates and fees of the card.
- Question: Annual Percentage Rate (APR)
Answer: The rate which is charged for borrowing (or made by investing), expressed as a single percentage number which represents the actual yearly cost of funds over the term of a loan.
- Question: Grace Period
Answer: The number of the days between a consumer’s credit card statement date and payment due date when interest does not rise. It is a window of time during which a consumer owes money to a credit card firm for new purchases made during the last billing cycle but is not being charged interest.
- Question: Minimum Payment
Answer: The smallest amount of a credit card bill which a credit card holder has to pay each billing cycle.
- Question: Penalty Annual Purchase Rate (APR)
Answer: It is a higher interest rate which can be triggered by the slightest infraction such as just one payment which is received a day late.
- Question: Balance Transfer
Answer: This is a moving outstanding balance from one credit card to a new credit card, used by the consumers who want to move their debt to a credit card with fewer penalties, lower interest rate, or other benefits, such as reward points or travel miles.
- Question: Cash Advance
Answer: A service provided by lots of credit card issuers that allows the cardholders to withdraw a certain amount of cash, either via an ATM or directly from a bank or other financial agency. Usually, they carry a high-interest rate, even higher than the credit card itself. And the interest will begin to accrue immediately.
- Question: Cash Back
Answer: A cardholder benefit is offered by several credit card firms that pay the cardholder a small percentage of their net expenditures (purchases fewer refunds).
- Question: Joint Account
Answer: A bank or brokerage account is shared equally between two or more individuals. This kind of account usually allows anyone named on the account to access funds within it.
- Question: Authorized User
Answer: A person who has permission to use or carry another person’s credit card, however, is not legally responsible for paying the bill.
- Question: Secured Credit Card
Answer: A kind of credit card which is backed by a savings account is used as collateral on the credit available with the card. Keep in mind that money is deposited and held in the account backing the card.
- Question: Down Payment
Answer: A kind of payment made in cash during the onset of the purchase of an expensive good or service. Usually, the payment will represent only a percentage of the full purchase price.
- Question: Annual Fee
Answer: A yearly fee which may be charged for having a credit card.
- Question: Credit Limit
Answer: The maximum amount which you may charge on your credit account.
- Question: Credit Card Agreement
Answer: A contract which outlines the terms and conditions for using your credit card.
- Question: Late Payment Fee
Answer: Fee charged when a cardholder does not make the minimum monthly payment by the due date.
- Question: Credit Card Statement
Answer: A detailed list of fees, payments, transactions,and balance figures for a credit card.
- Question: Introductory APR
Answer: The low rate usually charged during the beginning period after a credit account is opened, after which the regular, usually higher, APR will apply.