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Credit Card Components Teacher Organizer

Definitions:

Credit --
A loan of money that is given to a borrower for a specified amount and a specified
period of time.

Credit card --
A plastic card with an assigned account number, which enables the holder to
purchase goods or services and receive cash on credit.

Credit risk --
The risk that a borrower may not repay a loan on time, or at all.

Interest rate --
The cost of using the money provided by a loan, credit card, or line of credit,
usually expressed as a percentage over a period of time. Interest also refers to the
income, figured as a percentage of the original loan or principal.

APR --
Abbreviation for Annual Percentage Rate. The APR is basically the cost of credit,
or how much you must pay to get a loan, on a yearly basis. The APR is expressed
as a percentage, and it reflects the interest rate, as well other fees and charges.
APRs can vary widely from one credit card to another.

Credit limit --
The maximum amount of money a credit card holder is allowed to borrow using
the credit card.

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