Personal Finance Exam 2

a plastic access card used in computerized banking transactions; also known as a cash card.

debit card

types of payments instruments

debits cards, gift cards, smart cards, travel and entertainment cards, smartphones,

costs of owning/operating a vehicle

deprecation, interestes on loan, insurance, license, taxes, registration, gas, oil, tires, repairs, parking

advantges of renting a home

easy to move, few maintenance responsibilities, minimal financial commitment

living units that are fully or partially assembled in a factory then moves to a living site

factory built house

coverage that prevents loss of money due to the failure of the insured institution.

federal deposit insurance corporations

interest is different from finance charge because...

finance charge is the percent while interest is the actual money.

provide loans to consumers and small businesses.

finance companies

disadvantages of buying a home

financial commitment, higher living expenses, limited mobility

the total amount of interest and loan charges you would pay over the entire life of the mortgage loan

financle charge

advantages of credit

immediate services, able to purchase when funds are low, safe, no extra costs

amount in savings x annual interst rate x time period =

interest

the price you pay to borrow money or the return earned on an investment.

interest

offer money market funds- a combination of savings- and investment plans.

investment companies

provide financial security for dependents with various insurance policies. also retirement planning services.

life insurance companies

higher consumer prices/inflation result in....

lower buying power

how much do you have to pay for lost credit card?

max $50

organized primarily to provide loans for home purchases.

mortgage companies

dwellings with more than one living unit

multi unit dwellings

owned by depositors and specializes in savings and mortgages.

mutual savings banks

disadvantages of renting a home

no tax benefits, limited remodeling, restrictions

disadvantages of credit

overspending, failure to repay loans, ties up future income, costly

advantages of buying a home

pride of ownership, financial benefits, lifestyle flexibility

insurance required when the down payment less than 20 percent

private mortgage insurance (PMI)

traditionally specialized in savings accounts and mortgages

savings and loan associations

previously owned homes, new homes, and custom built homes.

single family dwellings

prepaid cards that provide you with immediate money

stored value cards/gift cards

five c's of credit: what is capital

the amount of your assets that exceed your liabilities or the debts you owe.

five c's of credit: what is conditions

the economic conditions that affect a borrowers ability to repay a loan

price of item divided by number of units of measurement

unit pricing

how much does FDIC insure per depositor per insured financial institution?

up to $250,000

when interest rates are rising you should

use long-term loans to take advantage of current low rates or select short terms savings to take advantage of higher rates when they mature

when interest rates are falling you should

use short term loans to take advantage of lower rates when you refinance the loans or select long term savings to lock in earnings

contractual agreement with monthly payments for the use of an automobile over a set period of, typically three, four or five years

vehicle lease.

Five C's of credit: what is character

what kind of person they are lending money to.

how to debit and credit cards differ

when using debit you are spending your owns funds rather than borrowing money. with credit cards you pay later but with debit you pay now.

Five c's of credit: what is capacity

your ability to pay additional debts

if you wait two days to tell the bank you lost your debit card how much do you have to pay?

$50

if you wait up to 60 days to tell your bank that you lost your debit card, about how much money will you have to pay?

$500

what are the types of mortgages?

- conventional 30, 20, & 15 year - FHA/VA fixed mortgage 30 & 15 year - adjustable rate 1, 3. 5, 7, or 10 years - interest only

what percent of net income should be spent on credit?

20%

five c's of credit: what is collateral

a valuable asset that is pledged to ensure loan payments

a reduction of a loan balance through payments made over a period of time

amortization

an estimate of current value of a property

appraisal

employ investment advisers and financial planners and serve as an agent for buying and selling stocks, bonds and other investment securities.

brokerage firms

offers checking, savings, lendings, and most services. national banks, regional banks, community banks, and online-only banks.

commerical banks

individually owned housing units in a building

condominiums

the use of credit for personal needs

consumer credit

form of housing in which the units are owned by a non profit organization

cooperative housing

an arrangement to recieve cash, goods, or services now and pay for them in future.

credit

an agecy that collects information on how promptly people and businesses pay their bills

credit bureaus

a small plastic card issued by a bank, business, etc., allowing the holder to purchase goods or services on credit

credit card

specializes in funding short-term retail lending.

credit card companies

user owned, nonprofit, felxible cooperative orgnizations. lower fees and lower loan rates.

credit unions