Main Types of Credit Organizer

Main Types of Credit Organizer

Directions: Summarize the main types of credit. Give examples when possible in the spaces provided.

Credit
What is credit?
What is trade credit?
Types / Details / Examples
Charge Account
Credit Cards
Installment Sales Credit
Consumer Loan / Promissory note
Why is collateral or a cosigner used?

Advantages and Disadvantages of Businesses Using Credit Organizer

Directions: Summarize common advantages and disadvantage of businesses using credit.

Advantages / Disadvantages

Cost of Credit Organizer

Directions: In your own words, respond to the questions in the spaces provided.

1. What factors are included to calculate interest?

______

2. What is the formula for calculating simple interest?

______

3. How is time determined for a loan for each of the provided lengths?

Years ______

Months______

Days______

4. How is a maturity date calculated?

______

5. How is a decreasing loan payment calculated?

______

6. What is APR? ______
______

7. What is disclosed in APR?

______

Name: ______Class: ______Date: ______

Maturity Date Activity

Directions: Calculate the maturity dates in the spaces provided.

Date loan made / Time length of loan / Maturity Date
1. January 15 / 10 days
2. August 10 / 30 days
3. May 5 / 45 days
4. October 24 / 90 days
5. March 3 / 4 months
6. January 12 / 6 months

Name: ______Class: ______Date: ______

Converting Time and Percents Activity

Directions: Convert the provided time and percents into decimals in the spaces provided. Round answers to the nearest hundredth for time conversions.

Time:

1. 1 month = ______

2. 3 months = ______

3. 6 months = ______

4. 9 months = ______

5. 1 year 6 months = ______

6. 2 years 3 months = ______

7. 10 years 4 months = ______

8. 15 years= ______

Percent:

9. .4% = ______

10. 8% = ______

11. 10% = ______

12. 15% = ______

13. 17.5% = ______

14. 18% = ______

15. 22.5% = ______

16. 25% = ______

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Converting Time and Percents Activity KEY

Directions: Convert the provided time and percents into decimals in the spaces provided. Round answers to the nearest hundredth for time conversions.

Time:

1 month = .08

3 months = .25
6 months = .5
9 months = .75
1 year 6 months = 1.5
2 years 3 months = 2.25
10 years 4 months = 10.33
15 years= 15

Percent:

.4% = .004

8% = .08
10% = .1
15% = .15
17.5% = .175
18% = .18
22.5% = .225
25% = .25

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Name______Class______Date______

Simple Interest Activity

Directions: Calculate the cost of credit and record it in the interest column. Use the simple interest rate formula: I=P * R * T.

Principal / Interest Rate / Time / Interest
$150 / 4% / 3 months / $1.50
$150 / 4% / 6 months
$300 / 10% / 6 months
$300 / 10% / 9 months
$1,000 / 8% / 12 months
$1,000 / 8% / 18 months
$10,000 / 18% / 1 year
$10,000 / 18% / 2 years and 3 months
$180,000 / 5% / 15 years
$180,000 / 5% / 30 years

Directions: Provide responses to the provided questions.

1. What is the relationship between the time length of a loan and interest?

______

2. Why are time and percents converted into decimals?

______

3. How should debtors compare credit costs among options?

______

4. Why is it important for debtors to compare credit cost among options?

______

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Simple Interest Activity KEY

Directions: Calculate the cost of credit and record it in the interest column. Use the simple interest rate formula: I=P * R * T.

Principal / Interest Rate / Time / Interest
$150 / 4% / 3 months / $1.50
$150 / 4% / 6 months / $3
$300 / 10% / 6 months / $15
$300 / 10% / 9 months / $22.50
$1,000 / 8% / 1 year / $80
$1,000 / 8% / 18 months / $120
$10,000 / 18% / 1 year / $1,800
$10,000 / 18% / 2 years and 3 months / $4,050
$180,000 / 5% / 15 years / $135,000
$180,000 / 5% / 30 years / $270,000

Directions: Provide responses to the provided questions.

What is the relationship between the time length of a loan and interest?

______

Why are time and percents converted into decimals?

______

How should debtors compare credit costs among options?

______

Why is it important for debtors to compare credit cost among options?

______

8721 Principles of Business and Finance Summer 2010, Version 2 Page 7

Name: ______Class: ______Date: ______

Installment Interest Activity

Directions: Calculate the total payment for a loan in the spaces provided.

Loan: Decreasing Loan Payment Schedule

$1,500 Car loan, 12% interest rate, monthly payments are $100 plus interest

Unpaid Balance * Interest rate = Interest (Remember: The amount of interest is based on the portion of the year.)

Interest + Loan Repayment = Total Payment

Months / Unpaid Balance / Interest / Loan Repayment / Total Payment
1 / $1,500 / $15 / $100 / $115
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Totals

Directions: Provide responses to the provided questions.

1. Is this purchase worth the cost? Why or Why not?

______

2. What economic and personal factors can affect interest rates?

______

Installment Interest Activity KEY

Directions: Calculate the total payment for a loan in the spaces provided.

Loan: Decreasing Loan Payment Schedule

$1,500 Car loan, 12% interest rate, monthly payments are $100 plus interest

Unpaid Balance * Interest rate = Interest (Remember: The amount of interest is based on the portion of the year.)

Interest + Loan Repayment = Total Payment

Months / Unpaid Balance / Interest Paid / Loan Repayment / Total Payment
1 / $1,500 / $15 / $100 / $115
2 / 1,400 / 14 / 100 / 114
3 / 1,300 / 13 / 100 / 113
4 / 1,200 / 12 / 100 / 112
5 / 1,100 / 11 / 100 / 111
6 / 1,000 / 10 / 100 / 110
7 / 900 / 9 / 100 / 109
8 / 800 / 8 / 100 / 108
9 / 700 / 7 / 100 / 107
10 / 600 / 6 / 100 / 106
11 / 500 / 5 / 100 / 105
12 / 400 / 4 / 100 / 104
13 / 300 / 3 / 100 / 103
14 / 200 / 2 / 100 / 102
15 / 100 / 1 / 100 / 101
Totals / $120 / $1,500 / $1,620

Directions: Provide responses to the provided questions.

Is this purchase worth the cost? Why or Why not?

______

What economic and personal factors can affect interest rates?

______

Main Factors for Granting Credit and Credit Documents Organizer

Directions: Describe the listed factors examined for granting credit and credit documents in the spaces provided.

Section A

Main Factors for Granting Credit and Credit Documents Organizer Continued

Section B

Directions: Describe the listed credit documents.

Credit Bureaus Activity

Directions: While viewing the three main credit bureaus websites, complete the requested information for each bureau in the spaces provided.

Equifax / Experian / TransUnion
Web address / www.equifax.com / www.experian.com / www.transunion.com
Three services offered to individuals
Three services offered to businesses

Credit Bureaus Activity KEY

Directions: While viewing the three main credit bureaus websites, complete the requested information for each bureau in the spaces provided.

Equifax / Experian / TransUnion
Web address / www.equifax.com / www.experian.com / www.transunion.com
Three services offered to individuals
(Answers may vary.) / 1. Provide credit report
2. Provide monitoring credit services
3. Assistance with identity theft
4. Assistance with score watch for better rates / Provide credit report and score / 1. Provide credit report
2. Provide monitoring credit services
3. Assistance with credit report disputes, fraud and identity theft
Three services offered to businesses / Answers will vary. / Answers will vary. / Answers will vary.

Credit Regulations and Credit Assistance Activity

Directions: Summarize the regulations or credit assistance options provided.

Credit Application Regulations
Truth-in-Lending Law
Equal Credit Opportunity Act
Credit Use Regulations
Fair Credit Billing Act
Fair Credit Reporting Act
Consumer Credit Reporting Reform Act
Fair Debt Collections Act
Credit Card Accountability, Responsibility, and Disclosure Act
Credit Assistance
Debt repayment plan
Credit Counselor
Bankruptcy

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