Personal Finance Chapter 5

cashier's check:

A check of a financial institution.

Automatic teller machine (ATM):

A computer terminal used to conduct banking transactions, also called a cash machine.

Mutual savings bank:

A financial institution that is owned by depositors and specializes in savings accounts and mortgage loans.

Commercial bank:

A financial institution that offers a full range of financial services to individuals, businesses, and government agencies.

Savings and Loan association:

A financial institution that traditionally specialized in savings accounts and mortgage loans.

Trust:

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

certified check:

A personal check with guaranteed payments.

Debit card:

A plastic access card used in computerized banking transactions, also called a cash card.

Share account:

A regular savings account at a credit union.

Money market account:

A savings account offered by banks, savings and loan associations, and credit unions that requires a minimum balance and has earnings based on market interest rates.

A Consolidated financial services account has the potential benefits of:

Keeping track of money in single location, fewer monthly and quarterly statements, lower fees for maintaining a large balance, simplified tax reporting, ease of communicating your financial situation.

Other financial institutions:

Life insurance companies, investment companies, brokerage firms, finance companies, credit card companies.

Non-Deposit Institutions:

Life insurance company, investment company, brokerage firm, credit card company, finance company, mortgage company.

What services do people consider when selecting a financial institution:

Services, costs, fees, earnings, convenience, online and mobile banking.

Opportunity costs of financial services:

The inability to access your money quickly, lost interest.

Rate of return:

The percentage of increase in the value of savings as a result of interest earned, also called a yield.

Annual percentage yield:

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

traveler's check:

allows you to make payments away from home.

Special endorsement:

allows you to transfer a check to someone else with the words pay to the order of, followed by name of person, then signature.

Restrictive endorsement:

consists of the words for deposit only followed by your signature.

Savings plans:

regular savings accounts, certificate of deposit, money market accounts and funds, savings bonds.

Financial service activities through your phone or tablet has three access methods of:

text banking and providing account information and conducting transactions through text messages, mobile web banking with bank's website, banking apps.

Notify debit card spending if not yours:

two days, sixty days.

Blank endorsement:

your signature.

Certificate of deposit (CD):

A savings plan requiring that a certain amount be left on deposit for a stated time period to earn a specified interest rate.

Money market fund:

A savings-investment plan offered by investment companies, with earnings based on investments in various short-term financial instruments.

Credit union:

A user owned, nonprofit, cooperative financial institution that is organized for the benefit of its members.

Asset management account:

An all in one account that includes savings,checking,borrowing,investing, all for a single fee.

Overdraft protection:

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

Deposit Financial Institutions:

Commercial bank, credit union, savings and loan association, mutual savings bank.

Electronic payments:

Debit card transactions, online payments, mobile transfers, stored value cards, smart cards.

Compounding:

Interest earned on interest.

How do changing economic conditions affect the use of financial services:

Interest rates, rising consumer pricing, and other conditions.

Mistakes made frequently when managing current cash needs include:

Overspending because of impulse, having insufficient liquid assets to pay bills, using savings or borrowing money, failing to but indeed funds in an interest earning account.

High-cost financial service providers:

Pawnshop, check-cashing outlet, payday loan company, rent to own center, car title loan company.

Truth in savings:

Rate of return, inflation, taxes, liquidity, safety, restrictions, feeds.

Types of checking accounts:

Regular checking account, activity account, interest earning checking account.

Evaluating checking accounts:

Restrictions, fees, charges, interest, special services.

Non-bank financial service providers:

Retailer stores, online banking service, online payment services, peer to peer.

Types of CD's:

Rising rate or bump up, liquid cds, zero coupon, indexed, callable.

Types of financial services:

Savings, Cash availability and payment services, borrowing,investments.