personal finance 5

five characteristics of annual percentage yield

1) compare rate of return with rate of inflation 2) taxes reduce interest earned on savings 3) is there a penalty or lower rate of interest if you withdraw your funds early 4) be ware of restrictions on savings plan such as a delay between the time when interest is earned and when it is actually paid into your account 5) are there any service charges if your account balance drops below certain amount

tips to follow when endorsing a check

1) don't endorse a check until you're ready to cash it 2) write sig on the left end and back 3) only use pen 4) if depositing by mail write for deposit only directly above your dig 5) sign name exact same

tips for investing in CDs 4

1) find out where you can get the best rate 2) consider the economy as you decide what maturity date to choose 3) never let a financial institution "roll over" a CD unless you have checked current interest rates 4) consider when you will need the money

4 characteristic of certificates of deposit

1) fixed period of time called term 2) date when none becomes available is called the maturity date 3) low risk way to invest your money 4) offers a higher interest rate than a regular savings account

selecting financial services and institutions

1) how to manage your cash 2) types of financial services 3) electronic banking services 4) types of financial institutions

5 characteristics of regular savings accounts

1) ideal if making frequent deposits and withdrawals 2) require little or no minimum balance 3) able to withdraw money quickly 4) trade off is low interest earnings 5) called share accounts at credit unions

interest-earning account

A bank account that earns you interest on your balance in the bank.

also administers the savings ssociayion insurance fund (SAIF) for savings and loan associations

FDIC

regular checking account

a checking account for which the monthly fee is usually based on the average balance maintained and the number of transactions recorded.

2 interest earning accounts

a cross between checking and savings accounts usually pays interest if a minimum balance is maintained

U.S. Savings Bond

a discount bond issued by the federal government that pays a guaranteed minimum rate of interest

The amount of interest that a $100 deposit would earn after compounding for one year

annual percentage yield

Debit card disadvantages

atm fees & lost debit cards , responsibille for $50

computer terminals that let you withdraw cash from or deposit cash to your account. you can also transfer money

automated teller machines ATMS

check clearing rules

bank holds funds two days for local check k hold funds 5 days for non local checks

a report that accounts for the differences between the bank statement and a checkbook balance

bank reconciliation

a time deposit that requires you to leave your money in a financial institution for a set amount of time

certificates of deposit

A for-profit institution that offers a full range of financial services ( savings checking lending )

commercial bank

Types of Financial Institutions

commercial banks, savings and loan associations, savings banks, credit unions, finance companies

the percentage in which interest is earned on both the principal the amount you deposited and on any previously earned interest

compounding

a nonprofit financial institutions that is owned by its members and organized for their benefit usually members have some common bond fees and loan rates are generally lower than a commercial bank

credit union

2 ways how to manage your cash

daily cash needs & sources of quick cash

allows you to withdraw money or pay for purchases from your checking or savings account

debit card

electronic banking services

direct deposit, automatic payments, ATMs, plastic payments

non-depository institutions

do not handle deposits, but they do act as an intermediary between savers and borrowers

the signature of the payee that party to whom the check has been written

endorsement

created by the federal gov in 1993

federal deposit insurance corporation

insures each account in a federally chartered bank up to $100,000 per account . increased in 2008 to $250,000 due to expire on december 31,2013

federal deposit insurance corporation

What does FDIC stand for and what does it do?

federal deposit insurance corporation it insured your money in the bank

4 characteristic of MMA

interest rate is usually higher than a regular savings account requires a higher minimum balance typically 1,000 allows you to write checks to make large payments or to transfer money to other accounts insured by FDIC

Examples of non depository institutions

life insurance companies , investment , finance , mortgage

check clearing

method by which a check that has been deposited in one institution is transferred to the issuer's depository institution

a savings account in which the interest rate varies from month to month

money malarkey accounts

specialize in savings accounts and mortgage loans. interest rates on loans from a mutual savings bank may be lower than commercial banks and interest paid on savings accounts may be higher

mutual savings banks

you use a debit card to purchase an item or a service at a retail store in a restaurant or elsewhere

point of sale transaction

formula compounding monthly

principal • annual interest rate / 12 = interest for 1st month

formula for rage of return

rate of return = total interest earned / amount deposited

also called passbook accounts

regular savings account

types of savings plans

regular savings account certificates of deposit money market accounts us savings bonds

Types of checking accounts

regular, activity, and interest-earning

4 ways for evaluating checking accounts

restrictions, fees and charges , interest , special services

types of financial services 4

saving payment services borrowing other finincaial services

traditionally specialized in savings accounts and mortgage loans. today offer many banks the same services as commercial banks

savings and loan associations

is a request that an institution not cash a particular check

stop payment order

reloadable or rechargeable

stored value cards

financial situations have to inform you of the terms and conditions of all savings accounts including fees interest rates in annual percentage yield

truth in savings act

regular checking account 2

usually no required minimum balance if there is a required minimum balance and balance and your account drops below that amount you will have a monthly service charge

three key limitations of certificates of deposit

you have to leave your money on deposit anywhere from a month to five or more years 2) you will pay a penalty if you take the money out before the maturity date 3) financial institutions require that you deposit a certain minimum to buy a CD