Focus on Personal Finance: Chapter 4
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 (S&L)
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.
debit card
A plastic access card used in computerized banking transactions; also called a cash card.
compounding
A process that calculates interest based on previously earned interest.
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.
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, and other financial services for a single fee; also called a cash management account.
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.
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.
