Credit Cards and Consumer Credit Cards and Consumer LoansLoansChapter 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.

•The latter extends the credit in advance of

any transaction so no reapplication is needed.

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.

Types of Credit Card Accounts

•Bank credit cards.

•Retail credit cards.

•Travel and entertainment cards.

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.

Common Aspects of Credit Cards (ctd)

•Credit card insurance

•Late-payment and over-the-limit fees.