Personal Finance Chapter 5

money market fund

A savings-investment plan offered by investment companies, with earnings based on investments in various short-term financial instruments

commercial bank

a financial institution that offers a full range of financial services to individuals, businesses and government agencies

savings and loan association (S&L)

a financial institution that traditionally specialized in savings accounts and mortgage loans

share account

a regular savings account at a credit union

credit union

a user-owned, nonprofit, cooperative financial institution that is organized for the benefit of the members

rate of return

the percentage of increase in the value of savings as a result of interest earned; also called yield

annual percentage yield (APY)

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

mutual savings bank

a financial institution that is owned by depositors and specializes in savings accounts and mortgage loans

debit card

a plastic access card used in computerized banking transactions; also called a cash card

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

automatic teller machine (ATM)

a computer terminal used to conduct banking transactions; aka a cash machine

trust

a legal agreement that provides for the management and control of assets by one party for the benefit on another

compounding

a process that calculates interest based on previously earned interest

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

asset management account

an all-in-one account that includes savings, checking, borrowing, investing, and other financial services for a single fee; aka cash management account

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

share draft account

an interest-bearing checking account at a credit union