Your Money and Credit Exam #2
a _____ card deducts money directly and immediately out of your account, and are offered by online banking
debit
cards that electronically subtract money from your savings or checkin accounts and are most commonly used at ATMs
debit cards
For simple interest on the ______ balance, interest is paid only on the amount of original principal not yet repaid
declining
Checking accounts are also known as ____ _____
demand deposits
____ _____ is used for paychecks and other regular income and is offered by online banking
direct deposit
_____ loans: from finance and check cashing companies, retailers such as car or appliance dealers, bank credit cards and cash advances
expensive
the total amount paid to use credit. includes interest costs and fees, service charges, credit related insurance premiums, or appraisal fees
finance charge
_____ _____ are non-deposit institutions that make short and medium term loans to consumers. They have higher rates.
finance companies
Other _____ _____ are insurance, investment, real estate purchases, tax assistance, trusts, and financial planning
financial services
money market ____ are not covered by the FDIC
funds
_____ ______ loans are loans based on the current market value of your home minus the amount you still owe on the mortgage
home equity
What to do if your ____ is stolen: 1. contact the 3 major credit bureaus 1. contact creditors 3. file a police report
identity
______ loans: from parents and family members
inexpensive
_______: higher consumer prices result in lower buying power of interest earned on savings. Compares rate of return vs the _____ rate
inflation
______ _____ checking accounts are checking accounts that are paying low interest
interest earning
_____ _____ are non-deposit institutions that are mutual funds and money market funds
investment companies
certificates of deposit have ____ liquidity and have a guaranteed rate of return for the time of the CD.
less
_____ _____ _____ are non-deposit institutions that offer insurance plus savings and investments. Some also offer financial planning and investing services
life insurance companies
6 types of non-deposit institutions are:
life insurance companies, investment companies, brokerage firms, credit card companies, finance companies, mortgage companies
______: ease with which savings can be withdrawn
liquidity
borrowing money with an agreement to repay along with interest within a certain amount of time
loans
when interest rates are falling you should select ____ term savings instruments to lock in earnings at the current high rate
long
when interest rates are rising you should use ___ term loans
long
_____-_____ loans: from commercial banks, savings and loan associations, and credit unions
medium priced loans
_____ _____ ______ and _____ having floating interest rate, allow limited check writing, have a higher minimum balance
money market accounts and funds
_____ ____ ____ are a kind of investment companies that are combination savings and investment plans. They are not covered by the FDIC.
money market fund
_____ _____: purchase at financial institution, post office, store
money order
money market accounts and funds have ____ liquidity and have favorable rate of return.
more
_____ _____ are non-deposit institutions that provide home mortgage loans
mortgage companies
_____ _____ ____ are deposit institutions that specialize in savings accounts and mortgage loans. They are owned by their depositors, with profits going back to depositors by paying a higher rate on savings
mutual savings banks
used as needed until line of credit max is reached
open-end credit
______ are problematic financial businesses that make loans on possessions, have higher fees, and are used for quick cash
pawnshops
_______ ____ _______ are problematic financial businesses that give cash advances, check advance loans, postdated check loans, delayed deposit loans, and have high interest rates.
payday loan companies
checking accounts and automatic payments are _____ ______
payment services
____ ____: rate banks charge large corporations
prime rate
_____ __ _____: percentage increase in value of savings due to interest, increases with frequency of compounding
rate of return
______ ______ _____ are also known as passbook savings and statement accounts and have low minimum balances, easy withdrawal, are insured, and have a low rate of return
regular savings accounts
____-__-____ _______ lease merchandise at high interest rates to low income customers
rent-to-own centers
_______ and ____: minimum balance limitations and fee for additional transactions
restrictions and fees
When making a deposit there are 3 types of endorsements, one type requires "for deposit only" and is known as a _____ endorsement
restrictive
____-_____ _______ differentiates customers based on credit information. Higher rates are charged to riskier customers
risk-based pricing
_____: availability of deposit insurance
safety
Time deposits and savings and certificates of deposits are all types of ____
savings
____ & ____ ______ are deposit institutions that offer checking accounts, specialized savings plans, loans and financial planning, and investment services
savings & loan associations
credit unions have interest earning or ____ _____ accounts that require a minimum balance
share draft
when interest rates are falling you should use _____ term loans
short
when interest rates are rising you should select ____ term savings instruments to take advantage of higher rates when they are mature
short
_____ ______: computed on principal only without compounding the dollar cost of borrowing
simple interest
plastic card equipped with a computer chip that can store 500 times as much data as a normal credit card
smart cards
Liquidating savings accounts, CD's, and mutual funds or borrowing with either a credit card advance or a personal loan
sources of quick cash
When making a deposit there are 3 types of endorsements, one type requires "pay to the order of" and is known as a _____ endorsement
special
____: taxable interest reduces amount of earnings.
taxes
Annual Percentage Yield, or APY, is defined as the "_____ _____" which is based on annual interest and frequency of compounding
total percent
________ _____: sign each check twice
traveler's check
rate of return is also known as _____
yield
total liabilities/ net work should be less than
1
bankruptcy can be reported for __ years
10
Consumer credit payments should not exceed a maximum of __% of your net income
20
FDIC is insured up to _______ per person per financial institution and for certain retirement accounts
250,000
a FICO credit score is between ___ and ___
350 and 850
you may request a copy of your credit information within __ days of being denied credit
60
adverse dat can be reported on a credit report for _ years
7
____ = rate per period x # of periods per year
APY
____ are used to be able to obtain cash, check account balances, and transfer funds. these are offered by online banking
ATMs
percentage cost of credit on a yearly basis. the key to comparing costs when shopping for rates
Annual Percentage Rate (APR)
_____ or _____ management accounts are offered by investment companies and others to provide a complete line of financial services including checking accounts, ATM card, credit card, online banking, line of credit for quick cash loans, access to a variety of investments
Assest, Cash
____ gives all applicants the same rights and credit providers may not discriminate based on age, Social Security or Public Assistance, or housing loans
ECOA
The 3 major credit bureaus
Experian, Trans Union, and Equifax
_____ ______ _______ ____ of 1971 is a law that requires put of date information to be deleted, gives consumes access and the ability to correct misinformation, places limits on who can obtain your credit report
Fair Credit Reporting Act
__ & __ cards are not really credit cards, the balance is due in full each month. Examples are Diners Clubs, American Express. You don't pay for services and goods at the time you purchase them
T&E cards; Travel and Entertainment Cards
"_____ __ ______ ___" requires disclosure of fees on deposit accounts, interest rate, and annual percentage yield
Truth in Savings Act
money market ____ are covered by the FDIC
accounts
____-___ interest: interest is calculated on full amount of principal; interest added to original principal; payment = total divided by number of payments to be made
add-on
you may request a free copy of your credit report _____
annually
____ _____ ______ _____ is used for recurring payments and is offered by online banking
automatic payments transfer funds
When making a deposit there are 3 types of endorsements, one type requires only a signature and is known as a _____ endorsement
blank
____ ____ are non-deposit institutions that act as an agent for buyers and sellers of financial products.
brokerage firms
the C for can you repay your loan
capacity
the C for what are your assets and net worth
capital
An asset management account is also called a ____ _____ _____
cash management account
_____ _____: check from a financial institution; you pay the face amount and a fee
cashier's check
Rising rate or bump, stock-indexed, callable, promotional are types of various ___
certificates of deposit
_____ of _____ require minimum deposit, required time on deposit, have penalties for early withdrawal, take care when rolling over
certificates of deposit
_____ _____: personal check with guaranteed payment
certified check
the C for will you repay your loan
character
The 5 C's of credit
character, capacity, capital, collateral, conditions
____-____ _____ are problematic financial business that charge 1-20% of check's face value. AKA currency exchanges
check-cashing outlets
one time loans for a specific period and specific amount that is paid back in a specified period of time
closed-end credit
the C for what if you don't repay your loan
collateral
____ ____ are deposit institutions and are organized as corporations that offer a full range of financial services
commercial banks
4 types of deposit institutions are:
commercial banks, savings and loan associations, mutual savings banks, credit unions
Overspending, insufficient liquid assets, using savings or borrowing to pay for current expenses, failing to put unneeded funds in an interest bearing or investment account
common mistakes of meeting daily money needs
the C for what if your job is insecure
conditions
use of credit by individuals for personal needs, except a home mortgage
consumer credit
An arrangement to receive cash, goods or services now, and pay for them in the future.
credit
agencies that collect information on how promptly people and businesses pay their bills
credit bureaus
_____ _____ _______ are non-deposit institutions that specialize in short term loans
credit card companies
typically contain detailed credit data along with considerable personal information
credit files
a record of your complete credit history
credit report / or credit file
____ ____ are deposit institutions that are user-owned, non-profit, and provide comprehensive financial services. They have lower fees and lower loan rates.
credit unions