1. Credit: arrangement for deferred payment for goods and services

2. Finance Charge
• This refers to charges or fees which are applied to
your bill for using the credit card, eg balance
transfer fees, late fees, over limit fees
• A credit card company might issue a finance charge
because that is how they make money or it is the
consequences.

3. Interest Rate
Credit card companies could charge even the smallest
amount to something that’s bizarre.
For example:
Some companies offer 0% and some offer 40%!
It is dangerous to pay the minimum amount each
month because that could make your credit score go
down.

4. Credit Card Companies
• Credit Card Companies include:
 master card
 American express
 Discover card
 Visa

5. Credit Rating
A credit rating estimates the credit worthiness of an
individual, corporation, or even a country. It is an
evaluation made by credit bureaus of a borrower’s
overall credit history
A good credit score is 700 and above
A bad credit score is 650 and below

6. Benefits
• Benefits of using credit are:
 Convenience- can make it easy for you to buy.
 Immediate Possession- Credit allows you to have the item
now.
 Savings- Some stores wend notices of special sales to
credit customers.
 Credit Rating- you can establish a favorable credit rating.

7. Problems
• Problems concerned with credit are:
 Overbuying
 Careless buying
 Higher prices
 overuse of credit

8. Formula
• The formula for calculating the interest is interest=
principal x rate x time

9. Credit Application
• Is a form on which you provide information needed
by a lender to make a decision about gaining credit.
You often fill one out when you are applying to buy a
house, car, etc.

10. Truth in Lending Law
Truth in lending law of 1968 was the first of a series of
credit protection laws. Truth in lending requires that
you be told the cost of credit before signing
agreement.

11. Fair Credit Billing Act
• The Fair Credit Billing Act (FCBA) is a United States
federal law enacted as an amendment to the Truth
in Lending Act (codified at 15 U.S.C. § 1601 et
seq.). Its purpose is to protect consumers from
unfair billing practices and to provide a mechanism
for addressing billing errors in quot;open endquot; credit
accounts, such as credit card or charge card
accounts.