FINC 120 Lecture Notes - Lecture 7: Overdraft, Home Equity, Personal Bankruptcy
Document Summary
Credit crisis on borrowers monthly net income. Households were unable to repay the mortgages. Monthly consumer credit payments (excluding mortgage) should not exceed 20% of. Debt safety ratio = (monthly consumer credit payments) / (monthly take-home pay) Inform the lender if there is a delay in payment. Limit your usage to your ability to repay. Credit cards and other open account credit. Credit extended to consumers prior to a purchase. Consumer can buy up to a specified credit limit. Pay balance in full to avoid interest. Issued by department stores and oil companies. Works like writing a check by accessing checking account. Interest tax deductible (if deductions are itemized) Cost-effective way of verifying employment and credit history. True rate of interest over life of loan. Adb excluding new purchases - consumer friendly. Adb including new purchases - take the outstanding balance, including new purchases, and subtract payments and credits. Pay off cards with highest finance charges first.
