personal finance ch 5

liquid assets

cash and investments that can easily be converted into cash, such as checking accounts, money market funds, and certificates of deposits

traveler's check

checks issued by large financial institutions, such as Citibank, Visa, and American Express, that are sold through local banking institutions and are similar to cashier's checks except that they don't specify a specific payee and they come in specific denominations ($20, $50 and $100)

smart card

similar to debit cards, but these cards actually magnetically store their own accounts. Finds are transferred into the cards, which are then used the same way you use a debit card. When the funds run out, the cards are useless until more funds are transferred in

online banking

the ability to perform banking operation through your personal computer

FDIC

the federal aganecy that insures deposits at commercial banks. Up to 250,000$

internet banks

a bank that does not have physical branches. Only access through the internet. Because of the cost savings that internet only banks experience, many times they provide higher interest rates and lower fees than traditional banks.

cashier's check

a check drawn on a bank or financial institution's account

certified check

a personal check that has been certified as being good by the financial institution on which it's been drawn

Deposit vs. non-deposit type institutions

a. Deposit- financial institutions that provide traditional checking and savings accounts. Commonly referred to as "banks" b. Non-deposit type financial institutions- Financial institutions such as mutual funds and brokerage firms, which don't provide checking and savings accounts

interest bearing checking accounts

another name from an Interest bearing checking account is a NOW account. (Negotiable order of withdrawal). Checking accounts on which you earn interest on your balance.

1) EFT

any financial transaction that takes place electronically

asset management accounts

Comprehensive financial services packages offered by a brokerage firm, which can include a checking account; credit and debit cards; an MMMF; loans; automatic payments of fixed payments such as mortgages; brokerage services (buying and selling stocks or bonds); and a system for the direct payment of interest, dividends, and proceeds from security sales into the MMMF.

deposit type financial institutions

financial institutions that provide traditional checking and saving accounts. Commonly referred to as "banks"

commercial banks

offer the widest variety of financial services, including checking and saving accounts, credit cards, safety deposit boxes, financial consulting, and all types of lending services. They also dominate in terms of the dollar value of the assets they hold and they have more branch offices or locations than any other type of financial institution. They also tend to have neighborhood locations which allows for personal relationships

overdraft protection

provision of an automatic loan to your checking account whenever sufficient funds are not available to cover checks that have been written against the account

CD

savings alternatives that pay a fixed rate of interest while keeping finds on deposit for a set period of time that can range from 30 days to several years