types of credit. closed end or installment credit loans, merchandise and services are paid for this...
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Types of Credit
Closed End or Installment Credit
Loans, merchandise and services are paid for this way. Fixed amount of $$, fixed payments, interest, fixed period of time.
Orthodontia, medical services
Furniture, appliances, electronics
Loans: autos, houses, school, personal, etc.
Secured vs. Unsecured Loans Secured (collateral such as auto, house, etc.)
Unsecured (no collateral)
Revolving Credit
Many items can be bought using this plan as long as you don’t go over your limit and you make regular payments.
May be able to carry a balance, however, interest will be charged.
Charge card (30 day account)
The entire account balance must be paid in full when billed.
i.e. American Express
Credit Card
Retail cards (Target, Nordstrom, REI, GAP, etc.)
Travel/Entertainment (gas, Diner’s Club)
Bank Credit Card General Purpose cards accepted multiple places and issued through a financial institution (VISA, MasterCard).
Affinity CardsA financial institution plus non-financial group
join together to offer a card. Schools, sporting teams, airlines, non-profits,
Co-Branded Cards
Financial institution plus a retail company.
Stored Value CardsA type of electronic bank debit card. Stored-value cards have a specific dollar value
programmed into them. Banks provide these cards as a service for
customers who cannot open checking or other deposit accounts.
In total, American consumers owe:
$11.62 trillion in debt An increase of 3.4% from last year $880.3 billion in credit card debt $8.05 trillion in mortgages $1,122.7 billion in student loans
An increase of 10.5% from last year
Credit Card Debt
Credit card debt is the third largest source of household indebtedness. Only the mortgage and student loan debt markets are larger.
46.7 % of households had a credit card balance on December 30, 2012
Is lower credit card debt good for the economy?
Credit card debt is currently holding fairly steady – but whether or not that’s a good thing is up for debate.
Turn to your partner and discuss – what are the pros and cons of this?