Financial Algebra Definitions Flashcards

Study Notes

Credit and Debt Concepts

Credit: Arrangement to receive cash, goods, or services immediately, with payment deferred to a later date.
Debtors: Individuals or entities that utilize credit to make purchases or acquire services.
Creditor: An individual or institution that extends credit, to whom money is owed by the debtor.

Financial Assets and Earning Potential

Asset: Any tangible or material item owned by an individual or entity that has value.
Earning Power: Indicator of an individual’s potential or ability to generate income through employment or investments.

Credit Assessment and Reporting

Credit Rating: A numerical representation of an individual's creditworthiness provided by a credit reporting agency.
Credit Reporting Agency: Organizations that gather and maintain consumer credit information, selling reports to creditors to assess the risk of lending.
FICO Score: The most widely recognized method for calculating an individual’s credit score, influencing lending decisions.

Payment Structures and Costs

Installment Plan: Financing option allowing consumers to make payments on a product or service over a specified period, easing immediate financial burden.
Down Payment: An initial payment made towards an installment plan, typically a percentage of the total amount, required upfront.
Interest: A percentage-based charge applied to borrowed funds, representing the cost of using credit over time.
Finance Charge: Total cost incurred for borrowing, inclusive of all interest and associated fees, reflecting the expense of accessing credit.

Description

Test your understanding of key terms in Financial Algebra with these flashcards. Each card presents a definition that will help you grasp essential concepts like credit, debtors, and assets. Perfect for mastering foundational financial vocabulary.