801 by fanzhongqing

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									                                   T008.01.01




Credit
 8.01
 Evaluate various sources of credit
 available to the government, business,
 and consumers.



                   G3
Who uses Credit?                   T008.01.02




       Consumer Credit
         Credit used by people for personal

          reasons.
       Commercial Credit
         Credit used by businesses.




                     G4
 Types of Credit                                 T008.01.03

Charge Accounts – most common type of short-
 term or medium-term credit.
    Regular Charge Accounts
        Require that you pay for purchases in full within
         a certain period of time.
    Revolving Charge Accounts
        Allows you to borrow or charge up to a certain
         amount of money (credit limit) and pay back a
         part or the entire balance each month.
    Budget Charge Accounts
        Allows you to pay for costly items in equal
         payments spread out over a period of time.
                           G5
Credit Cards                                    T008.01.04

Single-Purpose
     Can only be used to buy goods or services at the business
      that issued the card.
     Examples: JC Penney, Sears
Multipurpose
     Similar to a revolving charge account.
     May be used at several locations.
     Examples: Visa and Master Card
Travel and Entertainment
     Similar to regular charge accounts.
     Must be paid in full each month.
     Example: American Express

                            G6
Banks and Other Financial Institutions                T008.01.05



   Single Payment Loan
       Debtor pays off loan in one payment.
       Promissory Note
           Written promise to repay with interest.
   Installment Loan
       Repaid in regular payments.




                                   G7
    Installment Loans                                      T008.01.06

Types:
       Student, mortgage, automobile, etc.
   Secured vs. Unsecured
       Secured loans are backed by collateral (help guarantee the
        repayment of a loan).
   Closed vs. Open Ended
       Closed-end credit is used for a specific purpose and involves
        a definite amount of money.
       Open-end credit gives you a certain limit on the amount of
        money you can borrow.
   Cosigner
       Responsible for the repayment of a loan if the original party
        does not pay.
                                   G8
                                        T008.01.07



    Seller-Provided Credit

   Many stores provide credit to customers.

   Same as Supplier Credit – used by
    companies for supplies purchased on a
    regular basis.

                        G9
                                       T008.01.08


Consumer Finance Companies


   Specialize in loans to people with poor
    credit ratings.
   The cost of credit is higher than other
    institutions.


                       G10
                                            T008.01.09


Payroll Advance Services

   Short-term loans.
   Pawnshop
       Based on the value of something you own.
   “Borrow Until Payday” Loan
       Cost is extremely high.


                            G11
Bonds                                                T008.10.10



 Bonds – written promise to repay a loan with
     interest on a specific date. The buyer of the
     bond is considered the creditor.
    Corporate Bonds
        Usually used to finance buildings and equipment.
    Municipal Bonds
        State and local governments use these to finance
         projects.
    Savings Bonds
        Sold by federal government.

                               G12
                                              T008.01.11


Other Sources of Credit for
Businesses
   Small Business Administration
       Offers a number of financial, technical, and
        management programs to help businesses.




                            G13
                                                        T008.01.12


Other Sources of Credit for
Consumers
   Life Insurance Plans
       Cash Value Insurance
           Provides both savings and death benefits.
   Retirement Plans


                                G14

								
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