Chapter 16 1. When credit first began in this country loans had high interest. 2. Credit has affected the American economy by helping to expand faster, but has caused collapse and recessions because of the miss use of it. 3. Making securities around the loan to make sure it is safe is called collateral 4. Advantages of using credit is expanding purchasing potential and raising your standard of living. 5. There are some disadvantages of using credit like purchase cost more than it does using cash and that you have to pay the bank for transactions. 6. Two kinds of open ended credit 1) Credit card accounts 2) Open day 30 accounts 7. Opened ended credit is different from installment credit because open ended credit is an agreement to lend the borrower an amt. up to started limit and installment credit is when stuff happens. 8. Common credit card terms are the annual percentage rate, the free period, method of calculating the finance charge, and transaction fees. 9. Laws require lenders to include all loan costs in the APR, because lenders compare all loan costs. 10. 7 major sources of credit 1) commercial ban k 2) credit unions 3) finance companies 4) private lenders 5) pawn shops 6) Retail Stores 7) Miscellaneous lenders 11. 3 examples of service credit 1) Credit unions 2) Retail stores 3) Credit cards 12. Credit unions offer lower interest rates on than do commercial banks because in order to get it you have to be a member 13. Consumers finance companies are different from sales finances companies 14. Finance companies charge high interest rates on their loans because they are willing to take risks that banks and credit unions not take 15. Pawn shops are business that are legal and buy items normally jewelry off of people with high interest in order to get it back and if not payed off then the item will be sold.