Chapter 5 Key Terms

Overdraft Protection

Automatic loan made to checking account customers to cover teh amount of checks written in excess of the available balance in checking account.

Commercial Bank

Offers a full range of financial services, including checkings, savings, and lending, along with many other services.

Mutual Savings Bank

Owned by depositors and, like the S&L, specialized in savings accounts and loans for mortgages.

Asset Management Account a.k.a Cash Management Account

Provides a complete financial services program for a single fee.

Automatic Teller Machine (ATM)

Provides various bamking activities and other types of transactions such as buying transit passes,postage stamps and gift certificates.

Share Account

Regular Savings Account but in a credit union.

Savings and Loan Association (S&L)

Specialized in savings accounts and loans for mortgages.

Compounding

The interest that is earned on previosly earned interest.

Rate of Return

The percentage of increase in value of your savings from earned interest.

Annual Percentage Yield

The percentage rate expressing the total amount of interest that would be recieved on $100 deposit based on the annual rate and frequency of compounding for 365-day period.

Money Market Fund (Mutual Fund)

A combination savings-investments plan in which the investment company uses your money to purchase a variety of short-term financial instruments.

Trust

A legal agreement that provides for the management and control of assets by one party for the benefit of another.

Money Market Account

A savings account that requires a minimum balance and has earnings based on the market interest rates.

Certificate of Deposit (CD)

A savings plan that requires that a certain amount be left on deposit for a certain period of time (ranging from 30-35 years) to earn a specific rate of return.

Credit Union

A user owned, nonprofit,cooperative financial instituion.

Debit Card

Activates ATM transactions and also used to make purchases.

Share Draft Account

An interest earning shared account at a credit union.