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Consumer Credit: Types and Accounts

Explore the world of consumer credit, including installment and noninstallment credit types, credit card accounts, and common aspects of credit cards such as teaser rates, fees, and liability. Learn about different types of credit cards and how they work.

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Consumer Credit: Types and Accounts

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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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