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Credit Cards and Consumer Loans

Credit Cards and Consumer Loans. Chapter 7. Types of Consumer Credit. Installment (closed-end) credit is the type in which the borrower must repay the amount owed plus interest. Noninstallment (open-ended or revolving) credit is a single payment credit.

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Credit Cards and Consumer Loans

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  1. Credit Cards and Consumer Loans Chapter 7

  2. Types of Consumer Credit • Installment (closed-end) credit is the type in which the borrower must repay the amount owed plus interest. • Noninstallment (open-ended or revolving) credit is a single payment credit. • The latter extends the credit in advance of any transaction so no reapplication is needed.

  3. Credit Card Accounts • Credit cards allow the holder to pay the balance either in full or carry over a balance. • If the balance is carried over, a minimum payment must be made each month to cover interest and principal.

  4. Types of Credit Card Accounts • Bank credit cards. • Retail credit cards. • Travel and entertainment cards.

  5. Common Aspects of Credit Cards • Teaser rates. • Default rates. • Variable interest rates. • Preapproved credit card offers. • Annual and transaction fees. • Liability for lost or stolen cards.

  6. Common Aspects of Credit Cards (ctd) • Credit card insurance • Late-payment and over-the-limit fees.

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