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If you are current on your credit card payments th … moreIf you are current on your credit card payments then the amount due is equal to the minimum monthly payment, which is usually between 2 and 5 percent of your credit card balance.
If you are delinquent on your credit card then the amount due is the amount that you need to pay in order to get back into good standing. More specifically, the amount due in this scenario is the sum of all the consecutive minimum payments that you have missed plus the amount of the upcoming minimum payment. For example, if you just missed one minimum payment of $30 and the upcoming minimum payment is another $30 then the amount due will be $60.
If you are delinquent on your credit card then the amount due is the amount that you need to pay in order to get back into good standing. More specifically, the amount due in this scenario is the sum of all the consecutive minimum payments that you have missed plus the amount of the upcoming minimum payment. For example, if you just missed one minimum payment of $30 and the upcoming minimum payment is another $30 then the amount due will be $60.
The rate at which amounts owed to a bank on a cred … moreThe rate at which amounts owed to a bank on a credit card or loan account appreciate in value over time, increasing one's debt. In other words, this percentage of your average balance over the course of the month or year is tacked onto what you owe. When it comes to credit cards, the APR, or interest rate, is only relevant when you don't pay for the total amount of your purchases in a respective month.
For example, if your loan has a 10% APR, you will pay $10 annually for every hundred dollars of balance.
Usually, different types of credit card transactions have different APRs. One card might have a different APR for cash advances than for purchases or balance transfers. Also, some credit cards appeal to consumers with a low introductory APR; for example, 0% APR on balance transfers (or purchases) for six months.
For example, if your loan has a 10% APR, you will pay $10 annually for every hundred dollars of balance.
Usually, different types of credit card transactions have different APRs. One card might have a different APR for cash advances than for purchases or balance transfers. Also, some credit cards appeal to consumers with a low introductory APR; for example, 0% APR on balance transfers (or purchases) for six months.
A debt that cannot be collected, which is written … moreA debt that cannot be collected, which is written off as a loss against a lender's taxes. Debt must be charged off in three cases: if it is a certain number of days past due (120 days for a loan and 180 days for credit card debt), if the debt holder dies, or if the debt holder goes bankrupt.
A charged-off debt is not forgiven, though, and it stays on your credit report for 7 years. Lenders also generally sell charged-off debt to collection agencies who will attempt to recoup the debt through various means including lawsuit until its statute of limitations runs out, a time period that varies by state.
A charged-off debt is not forgiven, though, and it stays on your credit report for 7 years. Lenders also generally sell charged-off debt to collection agencies who will attempt to recoup the debt through various means including lawsuit until its statute of limitations runs out, a time period that varies by state.
Something of value that is pledged to pay off a lo … moreSomething of value that is pledged to pay off a loan or debt if payments aren't made according to the agreement. Also called security.
Mortgages and car loans are known as "secured" loans given that the underlying assets they are used to purchase (i.e. a house or a car) serve as collateral for the original loan. In other words, if a borrower does not make payments as originally agreed, the lender may be able to sell the aforementioned assets in order to recoup amounts owed.
Mortgages and car loans are known as "secured" loans given that the underlying assets they are used to purchase (i.e. a house or a car) serve as collateral for the original loan. In other words, if a borrower does not make payments as originally agreed, the lender may be able to sell the aforementioned assets in order to recoup amounts owed.
Violation of your terms and conditions agreement; … moreViolation of your terms and conditions agreement; failure to pay your loan / credit card as agreed.
Monies billed on the balance of a credit card or l … moreMonies billed on the balance of a credit card or loan, usually expressed as a percentage of the amount of money owed. The specific rate of interest is referred to as an Annual Percentage Rate (APR).
An interest rate based on the banking system's flu … moreAn interest rate based on the banking system's fluctuating rate, usually in accordance with the Prime Rate.
The number of months that you can enjoy the "Intro … moreThe number of months that you can enjoy the "Introductory Rate" of your new credit card or loan, assuming you do not go into default.
If an "Introductory Period" is listed as a range (for example, 3 - 9 months), the final period will be determined by the credit card company after you submit your application. Their decision will be based on the strength of your credit history.
If an "Introductory Period" is listed as a range (for example, 3 - 9 months), the final period will be determined by the credit card company after you submit your application. Their decision will be based on the strength of your credit history.
Fancy term for saying that you are late on a loan … moreFancy term for saying that you are late on a loan or credit card payment.
Delinquency is measured in days, which correspond to the number of payments you have missed. That is why you'll sometimes hear "30 days delinquent" or "60 days delinquent", which would mean that you've missed one or two monthly payments, respectively, since your credit card or loan was in "good standing" (i.e. not late).
Delinquency is not reported to the major credit bureaus and you therefore do not incur credit score damage as a result of it until you have missed two consecutive payments (i.e. you're at least 60 days delinquency). In order to return your account to good standing, you must make payments for the number of months behind you are, plus the current month.
Delinquency is measured in days, which correspond to the number of payments you have missed. That is why you'll sometimes hear "30 days delinquent" or "60 days delinquent", which would mean that you've missed one or two monthly payments, respectively, since your credit card or loan was in "good standing" (i.e. not late).
Delinquency is not reported to the major credit bureaus and you therefore do not incur credit score damage as a result of it until you have missed two consecutive payments (i.e. you're at least 60 days delinquency). In order to return your account to good standing, you must make payments for the number of months behind you are, plus the current month.
Discount points are a form of prepaid interest tha … moreDiscount points are a form of prepaid interest that can be paid at the time of origination in order to lower the interest rate charged for the duration of a mortgage. One point costs 1% of the loan amount. For example, 1 discount point on a $100,000 mortgage would cost $1,000. Discount points are tax deductible in the year in which they are bought.
In general, buying one discount point will lower the interest rate on a 30-year mortgage by 0.125%, and the longer you plan on having your mortgage, the more sense it makes to buy a discount point.
In order to figure out whether purchasing discount points makes sense in your particular situation, you must determine 1) by exactly how much the discount point(s) will lower your interest rate; and 2) how the cost of purchasing the discount point(s) compares to the interest you will save with the lower rate over the amount of time you expect to have the loan in question.
Sometimes lenders also charge "origination points" to cover part of the cost of making a loan.
In general, buying one discount point will lower the interest rate on a 30-year mortgage by 0.125%, and the longer you plan on having your mortgage, the more sense it makes to buy a discount point.
In order to figure out whether purchasing discount points makes sense in your particular situation, you must determine 1) by exactly how much the discount point(s) will lower your interest rate; and 2) how the cost of purchasing the discount point(s) compares to the interest you will save with the lower rate over the amount of time you expect to have the loan in question.
Sometimes lenders also charge "origination points" to cover part of the cost of making a loan.
Closing costs are the fees and expenses that need … moreClosing costs are the fees and expenses that need to be paid in order to get finalize a mortgage or home equity loan. The closing costs you will be required to pay may vary from loan to loan, as some are state or federally mandated, while others are contractually provided for and can often be negotiated away. In addition, a borrower is not always required to foot the closing cost bill alone, as the seller will often chip in so as to secure a higher purchase amount or interest rate.
While there are no naming conventions for closing costs, meaning they may be referred to differently by different people, some of the most common are:
- Application Fee
- Appraisal Fees
- Document Preparation
- Notary Fee
- Recording Fee
- Survey Fee
- Title Service Fees
- Assumption Fee
- Attorney's Fees
- Brokerage Commission
- Discount Points
While there are no naming conventions for closing costs, meaning they may be referred to differently by different people, some of the most common are:
- Application Fee
- Appraisal Fees
- Document Preparation
- Notary Fee
- Recording Fee
- Survey Fee
- Title Service Fees
- Assumption Fee
- Attorney's Fees
- Brokerage Commission
- Discount Points
Indicates not only the length of time in which you … moreIndicates not only the length of time in which you are required to pay back your mortgage in its entirety, but also whether its interest rate will be fixed, variable or a mixture of the two. Some of the most common types of mortgages are 30-year fixed mortgages and 5/1 ARMs.
Fixed rate mortgages, like the 30-year fixed mortgage, have the same interest rate for the entire term, which could be any number of years.
Variable mortgages, more commonly known as adjustable-rate mortgages (ARMs), all have 30-year terms and offer a fixed interest rate for the first few years before switching to a variable interest rate that depends on either the Libor Rate or the Prime Rate. For example, a 5/1 ARM is an adjustable rate mortgage that has a fixed interest rate for the first 5 years and a variable interest rate that changes on an annual basis for the remaining 25 years.
Fixed rate mortgages, like the 30-year fixed mortgage, have the same interest rate for the entire term, which could be any number of years.
Variable mortgages, more commonly known as adjustable-rate mortgages (ARMs), all have 30-year terms and offer a fixed interest rate for the first few years before switching to a variable interest rate that depends on either the Libor Rate or the Prime Rate. For example, a 5/1 ARM is an adjustable rate mortgage that has a fixed interest rate for the first 5 years and a variable interest rate that changes on an annual basis for the remaining 25 years.
Many loans allow you to sign up for an interest-on … moreMany loans allow you to sign up for an interest-only payment option at the time you take the loan out, giving you the freedom to either make a full payment -- both interest and part of the principal -- or pay only interest in any given month. Interest only-loans tend to have higher interest rates than conventional loans given the increased risk they represent for lenders. The higher rate, coupled with the fact that it takes longer to pay off a loan when only paying interest during certain months, means interest-only loans also generally wind up being more expensive for borrowers in the long run.
This type of payment structure is helpful for consumers who may not be able to truly afford a purchase at the time they make it but expect their financial situation to change in the near future.
This type of payment structure is helpful for consumers who may not be able to truly afford a purchase at the time they make it but expect their financial situation to change in the near future.
The length of time from when you take out a loan t … moreThe length of time from when you take out a loan to when it is required to be paid in full. Depending on the loan, this could be as short as a few months or as long as 30 years.
A loan's term, along with its interest rate and the amount to be borrowed, dictate the monthly payments you'll be required to make. A shorter-term loan will cost less overall given that you will be incurring less interest than with a longer loan of the same amount, but it will come with higher monthly payments given that you must pay off the same balance in a shorter period of time.
A loan's term, along with its interest rate and the amount to be borrowed, dictate the monthly payments you'll be required to make. A shorter-term loan will cost less overall given that you will be incurring less interest than with a longer loan of the same amount, but it will come with higher monthly payments given that you must pay off the same balance in a shorter period of time.
A student loan that is not backed by the federal g … moreA student loan that is not backed by the federal government.
There are two primary types of private student loans: 1) School-channel loans -- Private loans that are approved by the borrower's school, generally have lower interest rates than other student loans, and which distribute funds directly to the school; and 2) Direct-to-consumer loans -- Loans that disburse funds to the borrower and limit the involvement of the respective financial institution to enrollment verification.
Private student loans are both similar to and different than federal student loans in a number of ways. While federal student loans have fixed interest rates, do not require a credit check for approval (since they're partially insured by the government), and have uniform rules regarding repayment issues, private student loans typically have variable rates (which makes one's monthly payments somewhat unpredictable), require an evaluation of the borrower's ability to repay amounts lent, and give the lender autonomy in raising rates or assessing penalties in the event of payment issues. Private student loans do not require repayment until after a borrower graduates either, unlike federal loans. There are also statutes of limitations that dictate the length of time during which you can be sued for private student loan debt, while federal student loans are never time-barred.
Private student loans and federal student loans are both exempt from bankruptcy protection, and missed payments for both are noted on your major credit reports.
There are two primary types of private student loans: 1) School-channel loans -- Private loans that are approved by the borrower's school, generally have lower interest rates than other student loans, and which distribute funds directly to the school; and 2) Direct-to-consumer loans -- Loans that disburse funds to the borrower and limit the involvement of the respective financial institution to enrollment verification.
Private student loans are both similar to and different than federal student loans in a number of ways. While federal student loans have fixed interest rates, do not require a credit check for approval (since they're partially insured by the government), and have uniform rules regarding repayment issues, private student loans typically have variable rates (which makes one's monthly payments somewhat unpredictable), require an evaluation of the borrower's ability to repay amounts lent, and give the lender autonomy in raising rates or assessing penalties in the event of payment issues. Private student loans do not require repayment until after a borrower graduates either, unlike federal loans. There are also statutes of limitations that dictate the length of time during which you can be sued for private student loan debt, while federal student loans are never time-barred.
Private student loans and federal student loans are both exempt from bankruptcy protection, and missed payments for both are noted on your major credit reports.
The amount a student's family is predicted to put … moreThe amount a student's family is predicted to put toward their education costs each year based on the family's size, collective income, assets, and number of members enrolled in college.
The Expected Family Contribution (ERC) is subtracted from the cost of attendance to determine a student's need for financial aid. The lower the ERC, the more likely a student is to qualify for federal student aid programs.
The Expected Family Contribution (ERC) is subtracted from the cost of attendance to determine a student's need for financial aid. The lower the ERC, the more likely a student is to qualify for federal student aid programs.
Incentive programs that allow debt from federal ed … moreIncentive programs that allow debt from federal education loans to be waived as a result of the debtor working in a certain high-need field.
Examples of jobs that would qualify for student loan forgiveness are teachers in low-income neighborhoods, teachers specializing in understaffed subject areas, social workers, and Peace Corps volunteers.
Examples of jobs that would qualify for student loan forgiveness are teachers in low-income neighborhoods, teachers specializing in understaffed subject areas, social workers, and Peace Corps volunteers.
The acronym FAFSA stands for Free Application for … moreThe acronym FAFSA stands for Free Application for Federal Student Aid. This application was developed by the office of Federal Student Aid, a subsidiary of the U.S. Department of Education, and serves as the primary gateway for students to receive most means of financial aid, whether it comes from the federal government in the form of a Pell Grant or Stafford Loan, a state program, or an institution such as a college, university, or private organization.
The FAFSA incorporates information about an applicant's financial circumstances in order to determine their level of need and, if the application is filled out online, will even retrieve an applicant's tax information directly from the Internal Revenue Service in order to simplify the process. The FAFSA does not take into account factors such as race, religion, or sexual orientation. The office of Federal Student Aid begins accepting FAFSAs January 1 of each year, and aid is dispersed on a first-come first-served basis.
The FAFSA incorporates information about an applicant's financial circumstances in order to determine their level of need and, if the application is filled out online, will even retrieve an applicant's tax information directly from the Internal Revenue Service in order to simplify the process. The FAFSA does not take into account factors such as race, religion, or sexual orientation. The office of Federal Student Aid begins accepting FAFSAs January 1 of each year, and aid is dispersed on a first-come first-served basis.
The mechanism through which the federal government … moreThe mechanism through which the federal government lends money to students and parents for educational costs after high school. While the government serves as the lender for this program, private companies act as intermediaries and service the loans.
Federal direct student loans can either be subsidized or unsubsidized, depending on the particular applicant's level of financial need. Interest rates vary depending on whether the loan is subsidized or not as well as whether it is for an undergraduate student, a graduate student, or the parents of a dependent undergraduate student.
There are a number of different repayment plans that federal direct student loan recipients can choose from, including a fixed monthly payment, a graduated plan where the monthly payment amount increases over time, and a plan where the amount of one's payment is based on their income.
Federal direct student loans can either be subsidized or unsubsidized, depending on the particular applicant's level of financial need. Interest rates vary depending on whether the loan is subsidized or not as well as whether it is for an undergraduate student, a graduate student, or the parents of a dependent undergraduate student.
There are a number of different repayment plans that federal direct student loan recipients can choose from, including a fixed monthly payment, a graduated plan where the monthly payment amount increases over time, and a plan where the amount of one's payment is based on their income.
A three-part test that courts use to determine whe … moreA three-part test that courts use to determine whether a debtor deserves to have his or her student loans discharged in bankruptcy on the basis that repayment would impose an â??undue hardshipâ?? on the debtor and his or her dependents.