Personal Finance unit 4

Check cashing businesses

Do not require that an individual be an account holder; they will cash any valid check anytime with no ID

Payment Services

Financial institutions often offer payment services like demand deposits and checking accounts to businesses and individuals so they can easily pay their bills. We are then able to write checks or use debit cards to take money out of our accounts and pay for things without the inconvenience of going to the bank for cash.

Pawnshops

Offer individuals a loan based on the value of the person's possessions, such as jewelry or other items.

Credit Union

are nonprofit, member-owned institutions—similar to banks—able to provide loans through deposits to checking and saving accounts. Loans are usually only granted to members of the credit union, who are also partial owners of the credit union. Since credit unions are nonprofit, they can often keep their costs down, which translates into higher interest rates for savings and lower rates on loans. Unlike commercial banks which allow almost anyone to open an account, credit unions are generally limited to a particular group who share a common bond, like public employees of the state. The federal government also provides a credit union for all federal employees and their families. Today, the membership requirements are less strict than they were in the past, largely because allowing more members into the credit union allows the credit union to provide more services. There are usually some limits to membership, such as living in a particular city or region, but the limits are usually wider than employment in a certain organization.

Stock-held savings institutions

are owned by stockholders

mutual savings institutions

are owned by the individuals who deposit their money in the institution.

Depository Institutions

one who receives money from costumer deposits like a bank. Financial institutions that accept deposits from individuals and provide loans

Loans

A lot of financial institutions offer credit to those people looking to borrow money. These credit opportunities can be short-term or offered over an extended period of time and are used for big things like home mortgages, automobiles, home improvements, education, medical expenses, or travel.

rent-to-own

An arrangement whereby consumers lease something (often furniture), making regular rental payments, and become owners of the rented object(s) after a specified period of time.

financial services

Financial institutions offer these services to help individuals better manage their money and may even provide financial planning, tax assistance, or investment advice.

life insurance companies

Life insurance companies are also non-depository financial institutions who sell life insurance paid out by the company on the death of an insured individual. Many folks today buy life insurance to provide a measure of security for their families in the event of their unexpected death. Individuals buying life insurance pay insurance premiums to an insurance company for the policy, and in turn, the company takes these premiums and invests them on behalf of the company—potentially earning profits from those investments. Some such life insurance companies also offer services like savings accounts and/or personal loans.

savings

Many financial institutions offer accounts where people can safely store their money for a period of time, all the while earning interest and being protected by insurance. Also, the money is generally available to the account holder at any time, although a fee may be charged if the balance falls below the minimum account limit.

401k

accounts are partially funded by employers using a pre-tax portion of your income and may also offer retirement accounts. Through regular work, individuals contribute to these accounts over the years so they have something to live on after retirement. There are several common types of retirement accounts in the United States, some of which will match the amount of untaxed wages contributed by employees

mutual fund companies

are a common type of non-depository financial institution and are essentially investment companies; they sell shares to individuals and pool funds to buy financial securities. As with other non-depository institutions, monies deposited into these institutions are not insured, but there are some mutual fund companies who offer customers low-risk (and rather appealing) investment options.

money mutual funds

are accounts of depositors and are pooled together by the mutual fund company and invested in different financial assets. The funds are often invested in short-term debt securities, which means they have a higher risk than savings accounts.

bonds

are another low risk investment choice promising to pay a certain amount of interest on the principle amount after a given time period—normally more than one year

brokerage firm

are another type of non-depository financial institution who manage and facilitate the purchase of stocks, bonds, and other types of investments. In general, someone who has an account with a brokerage firm uses it to deposit money, and a broker then uses it to purchase stocks and bonds as authorized by the account holder. The brokerage firm makes its money by charging a fee or commission for each sale or purchase on the part of an individual investor.

commercial bank

are probably the most well-known depository institution. They are funded through deposits into checking and savings accounts, and they provide services like mortgages, personal loans, and bank-issued credit cards. If you have a savings account or debit card, you are already familiar with this type of financial institution.

403b

ccounts are retirement accounts for individuals working in nonprofit organizations, such as schools, charities, or the government.

web-only financial institutions

have developed significantly over the last few decades. With no physical location, these depository institutions conduct all customer-related business through online technology. As a result, these financial institutions have a lower overhead and can sometimes offer higher interest rates on savings accounts. That said, people looking for a savings or checking account should always examine these web-only financial institutions carefully before depositing any money with them. Without a physical location to check out, individuals are at a greater risk of fraud if they don't fully verify the veracity of their chosen institution.

a certificate of deposit (CD)

is an account commonly offered at most commercial banks as well as some other institutions. CDs pay a standard rate of interest on your balance, but the money must be left in the account for a specified period of time, and this does not always work for some. The maturity date is the end of the CD account time when the money has finally matured and can be withdrawn. The interest rate on a CD depends on the amount of the deposit and the duration date of the CD.

payday loan businesses

may offer cash advances, delayed deposit loans, and postdated check loans but have certain rules

The four P's to remember before choosing where to put your money

products price place people

What does insurance do?

protects costumers who deposit money in banks that close or go bankrupt.

Savings and loans institutions

receive money from households like commercial banks do, but they use a large percentage of their money on home mortgages and receive money from individual deposits. These different depository institutions include savings banks and savings and loans (S&L) institutions, insuring people in the same way banks do. They are organized in two different ways: Stock-held savings institutions are owned by stockholders. Mutual savings institutions are owned by the individuals who deposit their money in the institution.

nondepository institutions

receive their money from a source like mortgage. institutions that provide certain financial services but do not accept traditional deposits

4 common financial services

savings payment services loans financial services

cons of check cashing busninesses

they can take a big chunk of the check if its not paid back