Introducing
Your new presentation assistant.
Refine, enhance, and tailor your content, source relevant images, and edit visuals quicker than ever before.
Trending searches
Section 10.3: Sources of Consumer Credit
37
4. Credit card cash advances.
• ATM
• Extremely high interest rate.
5. Pawn brokers
• Give something and get cash.
• They hold the item until you pay them back.
6. Rent-to-Own companies
• Pay rent on the item until you own it.
• Rent-a-Center is an example.
Credit Cards
• Easy to obtain.
• 2 types:
1. Regular charge account
• Can NOT carry a balance from month to month.
• Must be paid off in full at the end of the month.
• Ex. Diner’s Club, AMEX Black Card, certain dept. store.
2. Revolving charge account
• Minimum payments.
• Carry a balance (the balance is charged the interest).
Incentives
• Strategies that credit card companies use to get you to sign up/use their cards.
o Examples:
o Airline miles
o Free/discounted gas
o Reward points
Control Credit Cards
• Choose least expensive/lowest interest.
• Avoid minimum payment trap.
• Paying the least amount every month.
• Consider taking out a loan as an alternative.
• Scheduled payments.
• Lower interest.
Types of Loans
Sources of Loans
Basic Forms
Costs
• Annual fee.
• Amount charged regardless of usage.
• Interest
• Added to unpaid balance.
• Varies
• Many offer introductory rates.
• Most give a grace period between billing date and due date.
1. Secured
• Backed by something of value a.k.a. collateral.
• Failure to repay the loan would could result in you losing the item you used.
2. Unsecured
• No collateral used.
• Loan based solely on creditworthiness.
• Drawback = higher interest.
1. Credit
• Fluctuating balance.
• Pay what you can each month (usually a minimum payment required.
2. Loans
• Predetermined amount of money.
• Scheduled payments.
• Many institutions give loans other than standard banks.
1. Savings and loans
o Focus on mortgages.
o Shop around for best rates.
2. Financial companies
• More likely to give credit without credit history.
• Higher interest rates.
3. Life Insurance companies.
• Use your life insurance policy as collateral.
• Low interest rate.