List and describe the three types of credit.

What will be an ideal response?

Consumer credit: is made of three types.

?Open charge accounts-customers obtain possession of goods at the time of purchase, with payment due when billed.?Installment accounts-long-term consumer credit that requires a down payment and typically allows a repayment period of 12 to 60 months.?Revolving charge accounts-seller grants a customer a line of credit, and charged purchases may not exceed it.

Credit cards: are also made of the three types.
?Bank credit cards-the most common are MasterCard and VISA and are widely accepted with a fee charged to the retailer.?Entertainment credit cards - the most known are American Express and Diner's Club and are also widely accepted and have a fee charged.?Retailer credit cards - companies that offer these cards include department stores and oil companies which are only for their outlets.  

Trade credit:  Sellers to business extend credit with specific terms, such as 2/10 net 30.  Failure to pay within the discount period makes the full amount of the invoice due in 30 days.  Sales terms for trade credit depend on the product sold as well as the buyer's and seller's circumstances.  The credit period often varies directly with the length of the buyer's inventory turnover period.  The larger the credit rating of the buyer, the better the terms of the sale will be.  The greater the financial strength and the more adequate and liquid the working capital of the seller, the more generous the seller's sales terms can be.  In many types of businesses, terms are so firmly set by tradition that a unique policy is difficult for a small firm to implement.

Business

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