Slide MGT312 Slide05

Credit Cards and Consumer
Loans
Chapter 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.