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This type of credit allow debtors (customers) to receive goods or services from suppliers (creditor) and pay for them at a later date.

Charge accounts

Type of credit that is a contract issued by the seller that requires intermittent payments at specified

times such as bi-weekly or monthly.

Installment

Type of credit that require debtors to make monthly

payments of a specified amount for a period of time.

Consumer loans

Name 2 advantages of businesses using credit.

Establishing favorable credit ratingKeeping business separate from personal expenses

Minimizing record-keeping and receiptsKeeping track of what employees are spending

Earning rewards

Name 2 disadvantages of businesses using credit.

Experiencing theft of customer records/databases

Overbuying by employees

Overusing credit

What are the 3 factors of granting credit? 3 C’s

CharacterCapital

Capacity

What does capacity refer to?

how much debt can comfortably be handled.

What does the signature on the credit application signify?

Indicates provided information is true.

What are the 3 credit bureaus?

Name 2 things that could be found on a credit statement.

Balance due

Amounts charged or credited during the billing period

Current balance

Minimum amount of next payment

This law requires lenders to reveal the cost of credit (APR and finance

charge) and terms before signing an application or contract.

Truth in Lending Law

This law allows credit applications be judged on

financial responsibility of credit applicants. The three areas of

responsibilities are low income, large debts, and a

poor payment record.

Equal Credit Opportunity Act

This law requires creditors to correct billing mistakes promptly.

Fair Credit Billing Act

What are the 3 types of credit assistance?

Debt repayment plan

Credit counseling

Bankruptcy

How long does bankruptcy stay on a person’s credit report?

10 years

What type of risk results in a financial loss?

Economic

What type of risk is the threat of a loss without an opportunity for

gain?Pure

What type of risk offers the chance of gain or loss?

Speculative

What are 3 of the 4 ways to handle risk?

AvoidTransferInsure

Assume

Name 3 of the 6 types of uninsurable risks.

Economic ConditionsConsumer Demand

Action of CompetitorsTechnology Changes

Local FactorsBusiness Operations

This type of health insurance covers all or part of the surgeon’s

fees for an operation.

Surgical

This type of health insurance covers fees for nonsurgical care given in the doctor’s office, the patient’s home, or a hospital.

Regular

This type of health insurance covers cost of extended and specialized care out of the

hospital such as medicine and special nursing care.

Major medical

This type of health insurance combines the features of

hospital, surgical, regular, and major medical insurance.

Comprehensive

What’s the difference between term and permanent life

insurance?Term-like renting. But cheaper.

Permanent-like owning a home. If you want to walk away from policy, you get the cash

you put into it. More expensive.

Han sued a furniture store that verified it provided inaccurate information about his credit

history. Which regulation would protect him in having the information corrected?

Fair Credit Reporting Act

Fred's Electric Company receives over thirty service orders daily. The company's manager refers some of the orders to another company, since she wants to

maintain a reputation of completing orders in a timely

manner. How did the company handle the risks?

Transfer

After talking with a Sears customer representative about

her overdue balance, Tina implemented a strategy that will

minimize her debt. Tina used which type of credit assistance?

Debt repayment plan

GEICO Insurance Company opened several new offices to

accommodate requests of policy holders for face-to-face contact. This is an example of which type

uninsurable risk? Consumer demand

Chase Mortgage Company sends quarterly summaries of

transactions. Which type of document does the company

send?

Statement of account

Many newspapers are experiencing fewer subscribers since more subscribers are now obtaining news from the Internet. This is an example of which type

uninsurable risk? Technology change

ABC Investment Company invested over $300,000 obtained from their clients. The company

gained 5% as a return on its investment. This is an example of

which type of insurance risk? Speculative

Mary paid only $50 for unauthorized charges made to her Capital One MasterCard.

Which regulation protected her?

Truth in Lending

Mary makes prearranged equal payments monthly to Progress

Energy. Which type of credit did Mary use?

Charge account

Josh saved over $10,000 in a local bank while working on his job for the past six years. Which "C" of credit is he MOST LIKELY

to meet?

Capacity

Tonya is considering shopping at a Rooms To Go furniture store

that advertises the option of payments for a period of three years. Which type of payment

option was advertised? Installment

A local food company filed an insurance claim to compensate employees who lost personal belongings in a company fire.

This is an example of which type of insurance risk?

Economic

A bank loaned Doug $4,500 for 24 months. Which type of credit

did he accept? Consumer loan

The Whole Foods Market provides workshops on how to prepare healthy meals. During

the past three months, the attendance increased over 40%. This is an example of which type

uninsurable risk? Consumer demand