MUHS Personal Finance Lesson 7&8

automatic payments system

Customers authorise monthly payments to be withdrawn automatically from their accounts. Example: Utility, phone bills, insurance premiums, or car loans.

Federal Deposit Insurance Corporation (FDIC)

It is a regulatory agency that periodically examines banks to assure that they are following proper practices. Any deposit up to $250,000 in a federally chartered bank is insured.

activity checking account

It is likely to charge monthly fees. There may be a fee for each check written or other withdrawal, and even a fee for each deposit.

debit card

It is linked to a given bank account where funds are automatically taken out when used.

interest-earning account

It is often a combination checking and savings account. You receive interest as long as a minimum balance is maintained.

regular checking account

May or may not require that you keep a minimum balance in order for you to avoid fees or services charge.

Monetary Policy

The Fed uses this to stimulate the economy or to control inflation. It can also influence the prices of the products we buy.

Federal deposit insurance reform act of 2005

The Reform Act merged the Bank Insurance Fund (BIF) and the Saving Association Insurance Fund (SAIF) into a new fund called the Deposit Insurance Fund (DIF)

Payment Services

The ability to transfer money from one's account to others.

Commercial Banks

The most familiar type of depository institution. They offer checking (payment services), savings, and lending. Banks are for-profit institutions.

Borrowing

These loans are usually for a set period of time and have a predetermined rate of interest.

Mutual savings bank

They are owned outright by their depositors.

Investment companies

They combine the funds of many individual and institutional investors in order to buy stocks, bonds, and other securities. It might not be insured by the FDIC or have a guaranteed rate of return.

Non-depositry institutions

They don't accept deposits from customers.

Payday loan companies

They offer cash advances or short-term loans intended to cover expenses when an individual runs out of money between pay checks. (It is highly recommended not to use this service and should be considered as a last resource)

Financial Institutions

They offer savings, payment services, and borrowing. They are not required to offer every one of the following services.

The Federal Reserve System

They regulate, supervise, and stabilise the money supply to prevent violent swings in economy. All national banks must be members. There are 12 Federal Reserve districts in the U.S. it is a quasi-public banking system (government entity with private components)

Mortgage companies

They specialise in making loans for the purchase of homes or other real estate.

automated clearinghouse (ACH)

To transfer funds between banks using only electronic payment entries, not paper checks. It is the standard in banking industry.

Savings

a place to store funds for the future use while they grow relatively safely. Banks pay their customers interest on the money in these accounts.

depository institutions

allow you to deposit money into your account for future use. the four main institutions are commercial banks, credit unions, mutual savings banks, and savings and loans.

Credit unions

are organised and owned by their members, who generally have something in common. Their fees and loan rates are lower than commercial banks. They are considered not-for-profit institutions.

Pawnshops

make loans based on the agreed-upn value of goods that the borrower surrenders temporarily until the loaned money can be paid back. They charge higher borrowing fees than others.

Consumer finance companies

often provide consumer loans for durable goods such as cars or appliances. Lending is the focus of them.

Direct deposit

or automatic deposit of net pay into the employee's bank account. It is a safe way to transfer money.

Discount rate

or interest rate it charges banks to borrow money, which is usually quoted as an overnight rate.

trustee

the person to whom the property is entrusted, keeps the clients informed on how the benefactor's financial affairs are being handled.

Check-cashing outlets (CCOs)

they cash checks for a fee. It is used most often by people who don't have bank accounts or access to other financial services.

Life insurance companies

they provide security for families in the event of the death of the insured.

Mutual savings bank and savings and loan

traditionally have specialised in making mortgage loans to home buyers while offering savings accounts to everyone.

The National Credit Union Administration (NCUA)

An agency that would most likely have supervisory and oversight powers regarding lending and savings institutions whose services are focused on specific worker groups.

ATM (automated teller machine)

An electronic terminal that allows the holder to withdraw money from his or her account.