Consumer Economics Vocabulary – Flashcards
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Annual Fee
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An amount that credit card companies can charge for the use of a credit card.
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Annual Percentage Rate (APR)
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The total amount of what it costs you to use credit in a given year. It is expressed as a percentage of the amount borrowed.
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Automated Teller Machine (ATM)
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An electronic machine that bank customers and credit unions members can use to withdraw cash and make other financial transactions.
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Bank
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A for-profit company that is owned by its stockholders and provides savings and checking accounts and other financial services to its customers.
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Bankruptcy
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A legal process to get out of debt when you can no longer make all your required payments.
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Bond
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A formal agreement where you (the bond holder) will lend money to a borrower who can use that money for a set period of time. In exchange, you, as the lender, will get paid a specific amount of interest.
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Budget
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A spending plan for managing money during a given period of time.
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Capital Gain
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The difference between the purchase price and the selling price when the investor buys a stock and sells later at a higher price.
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Capital Loss
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This is the difference when an investor ends up selling a stock at a lower price than the purchase price.
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Career
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An occupation that is your chosen field and that provides you with an income, an activity, challenges, opportunities for advancement, and satisfaction.
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Cash Flow
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Movement of the money you receive and the money you spend.
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Chapter 7
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A form of bankruptcy that allows you to erase most of your debt.
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Chapter 13
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A form of bankruptcy that allows you to repay many of your debts over a period of time, usually no more than five years.
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Checking Account
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A bank or credit union account that allows withdrawals by writing a check.
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Compounding or Compound Interest
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Earning interest on interest.
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Coverage Limit
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The maximum amount an insurance company will pay if you file a claim.
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Credit
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An amount of money, or something of value, that is loaned on trust with the expectation that it will be repaid at a later date.
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Credit History
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A record of how you have repaid your credit obligations.
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Credit Limit
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This is the maximum amount of credit a lender will extend to a customer.
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Credit Report
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A detailed record of your personal credit and financial transactions.
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Credit Score
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A rating used by credit reporting companies to help lenders decide whether and/or how much credit can be extended to a borrower.
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Credit Union
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A financial institution owned by its members that provides savings and checking accounts and other services to its membership at low fees.
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Debit Card
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A card that is used to deduct a purchase amount directly from your checking account instead of drawing on a line of credit; also called "check card."
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Debt
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The entire amount of money you owe to lenders.
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Deductible
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The amount of a loss you must pay out of your own pocket before the insurance company will step in and pay the rest.
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Delayed Gratification
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The willingness to give up something you want now in order to get something better in the future.
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Diversification
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Reducing investment risk by putting money in several different types of investments.
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Dividend
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The portion of the profits paid to the shareholders of a company.
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Dollar Cost Averaging
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The practice of investing a fixed amount into the same investment at regular intervals, regardless of what the stock market is doing.
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Earned Interest
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The payment you receive for allowing a financial institution or corporation to use your money.
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Electronic Funds Transfer (EFT)
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A way to give permission to pay bills and have paychecks deposited directly into your account via electronic terminal, automated teller machine, computer, or telephone.
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Endorse
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To sign the back of a check to make it payable to the specified payee.
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Entrepreneur
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A person who starts his or her own business based on the belief that he or she can make a better product or provide a better service than what existing companies provide.
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Expense
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An amount of money spent to buy something or do something.
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Federal Income Tax
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A payroll deduction collected by employers by law and sent to the federal government to support governmental programs.
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Finance Charge
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Usually seen on credit card statements to represent the actual dollar cost of using credit to maintain a balance.
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Financial Planning
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The process of setting spending priorities, defining goals and developing a plan to achieve them, and then putting the plan into action.
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Fixed Expenses
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Expenses that cost the same amount every time.
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Freeware
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Also known as free software; can be used to obtain your personal information from your computer.
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Goal
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A statement of something a person wants or needs to do.
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Grace Period
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On a credit card, the length of time you have before you start accumulating interest on an unpaid balance.
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Gross Income
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The total amount of income from wages before any payroll deductions.
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Identity Theft
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When someone uses your name, Social Security number, credit card number, and other personal information without your permission
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Income
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Any money you recieve
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Inflation
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A rise in the cost of goods and services
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Insurance
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A way to guarantee your financial protection against various risks.
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Insurance Policy
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A written contract detailing how much you will pay for insurance coverage and what an insurance company will cover and pay in the event of a loss.
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Insurance Premium
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The amount you pay for an insurance policy.
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Interest
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1. Payment for the use of money (Principal x interest rate x time). 2. A charge for a loan, usually calculated as a percentage of the principal.
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Intermediate-Term Goal
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A goal that is set for three months to a year.
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Investing
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Putting money to use in a venture that offers the possibility of growing in value as interest, income, or increased value
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Job
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An occupation that provides you with the basics-cash and something to do to earn it.
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Late Fee
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A penalty on all types of credit for making payments after its due date.
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Liquid
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An asset that can be converted into cash quickly and with minimum impact to the price received.
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Loan Term
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The length of time you have to pay off a loan.
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Long-Term Goal
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A goal that will take more than a year to achieve.
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Medicare Tax
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A payroll deduction collected by employers by law and sent to the federal government to provide medical insurance to the elderly and to some disabled Americans.
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Mutual Fund
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An investment security that is actually a diversified portfolio of equities, bonds, or other securities. Investors purchase shares and can sell them at any time.
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Needs
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Things we must have to survive; for example, food, clothing, water, shelter
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Net Income
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Also called "take-home pay"; it's the amount of income left after payroll deductions.
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Opportunity Cost
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The value of what is given up when you choose one option over the other.
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Origination Fee
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A charge for setting up a loan that is typically associated with home loans.
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Over-The-Limit Fee
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A fee on credit cards for making charges above your credit limit.
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Pay Yourself First (P.Y.F.)
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Taking a certain amount of all the money you receive and saving it to be used for spending on longer-term goals.
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Periodic or Occasional Expenses
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Expenses that aren't paid every month and can be either fixed or variable.
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Personal Identification Number (PIN)
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The unique passcode number you use to get access to your savings and/or checking account.
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Phishing
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An identity theft tool that appears in the form of an E-mail or pop-up message; usually looks like it's from a legitimate financial institution and prompts you to provide your personal information in order to fix a "problem" with your account.
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Principal
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The amount of money someone is willing to loan you. Also the amount that is still owed on a loan
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Rate of Return
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The percentage of gain or loss on an investment over a period of time.
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Risk
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The probability that injury, damage, or loss will occur.
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Risk Management
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The process of dealing with the chance of potential personal or financial loss.
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Rule of 72
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A mathematical method that can be used to show how long it will take to double your money in an investment simply by dividing 72 by the rate of interest.
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Satellite Decisions
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Smaller decisions that can result from a major decision.
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Savings
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An amount of money that is set aside to be used for a future purchase.
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Savings Account
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An account you have at a financial institution that helps you accumulate and save money and earn a small amount of interest at the same time.
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Share Account
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The credit union term for a savings account.
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Share Draft Account
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The credit union term for a checking account.
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Short-Term Goal
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A goal to be achieved within the next three months.
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Social Security Tax
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A payroll deduction collected by employers by law and sent to the federal goverment to provide a small income and other services to the elderly, disabled Americans, and orphaned minors.
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Spending Plan
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Another term for budget
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Spyware
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A bad side effect of free downloads that may be used to send you pop-up ads, redirect your computer to unwanted Web sites, monitor your internet surfing, or record your keystrokes in an effort to steal your identity.
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State Income Tax
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A payroll deduction collected by employers by law and sent to the state government to support state services.
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Stock
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An investment that makes the investor a part owner of a company.
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Stock Market
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The place where stocks are bought and sold.
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Time Value of Money
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The idea that money today is worth more than the same amount of money in the future due to it's potential earning capacity.
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Universal Default
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A clause included in many credit card company agreements that allows a credit card company to increase your interest rate if you make just one late payment.
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Values
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The beliefs, qualities, or standards that you consider important or desirable.
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Variable Expenses
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Expenses that are not fixed.
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Wants
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Things that make life more interesting and fun but that people can live without if they have to.
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Yield
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The profit from an investment.
