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.