Chapter 5

Share account

Banks, savings and loan associations, and other financial institutions offer regular savings accounts. At a credit union, these savings plans

Automatic teller machine

Called a cash machine, provides various banking activities and other types of transactions such as buying transit passes, postage stamps, and gift certificates

Asset management account

Called a cash management account, provides a complete financial services program for a singel fee

Compounding

Refers to interest that is earned on previously earned interest

Savings and loan association

Specialized in savings accounts and loans for mortgages

Rate of return

Yield, the percentage of increase in the value of your savings from earned interest

Money market fund

A combination savings-investment 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 market interest rates

Certificate of deposit

A savings plan requiring that a certain amount be left on deposit for a stated time period (ranging from 30 days to five or more years) to earn a specific rate of return

Credit union

A user-owned, nonprofit, cooperative financial institution

Share draft account

An interest-earning checking account at a credit union

Overdraft protection

An automatic loan made to checking account cutomers for checks written in excess of the available balance

Debit card

Cash card, that activates ATM transactions may also be used to make purchases

Commercial bank

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

Mutual savings bank

Owned by depositors and, like the traditional savings and loan association, specializes in savings accounts and mortgage loans

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