Simple Interest and Compound Interest – Quiz Answers – Flashcards
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paying extra for the convenience of borrowing money compounding once per year
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simple interest
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pays you interest on what you deposited and on your interest you've already made; more frequently compounded=more interest over time
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compound interest and frequency
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how long it will take your money to double at a given interest rate
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Rule of 72
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A=P(1+r/n) to the nt
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compound interest formula
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Rule of 72 Formula
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interest percentage per period/72
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bank account used to hold savings
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savings vehicle
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most basic savings vehicle, less access to money than checking, websites and apps
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savings accounts
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higher interest rates (usually), might require high minimum balance
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money market account
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deposit held for certain period of time. during term bank pays interest; longer let bank keep=higher interest rate (higher than bank account), can be penalized if you have to take out
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certificate of deposit
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common in towns, offer savings and checking accounts, mortgages, personal loans, debit & credit cards, mostly deals w individuals and businesses
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retail bank
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non-for-profit cooperative bank owned and controlled by its members, offer savings & checking accounts, mortgages, personal loans, debit & credit cards; usually restricted to people who live or work in central areas, are a student/employee at certain university, or member of military
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credit union
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savings and checking accounts, debit & credit cards
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online banks
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NOT banks, HAVE high interest and fees, receive loans in form of cash
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payday loans, lenders, check cash services
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(1913) oversees the nation's system of money available prints money, controls amount of available money, adjusts long term interest rates, keeps prices stable, promotes high employment independent institution w some governmental oversight
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Federal Reserve Act
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board of governors, 12 regional reserve banks, federal open market committee board of governors: supervises banks, monetary policy (how much money available to economy) 12 regional reserve banks: research the economy, financial services to banks and gov FOMC: money supply, interest rates charged to banks
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3 parts of Federal Reserve System, what do they do?
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federal deposit insured corporation, makes sure you don't lose money if bank problems, national credit union administration gives insurance, save $250,000 in each category of banks per person
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FDIC insured (federal deposit insured corporation)
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auto-pay lets you pay bills automatically, direct deposit (from employer to account)
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checking account features
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THE NATIONAL CREDIT UNION ADMINISTRATION
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credit unions have their own insurance through...
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ATM, bounced check (write check wout money in account), service, overdraft (take $ out of account you don't have), required balance fee
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Account fees
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first range of numbers at bottom, which bank money coming from, need to know for direct debits & deposits
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routing number
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second range of #s, which account $ coming from, need to know for direct debits & deposits
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account number
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why you're paying, not required
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memo line
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does not establish federal budget, but does supervise the reserve banks, set nation monetary policy, maintain stable banking system
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Federal Reserve
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bank guarantees will not bounce
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cashier's check
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balance must be paid in full permonth
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charge card
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money for a purchase comes directly out of checking account
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debit/credit cards and checks
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cash advances
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loans from CC
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get you by until next payday, high fees and interest
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payday loans
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interest rate charged by your credit card on any balance not paid off before the next billing cycle
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APR
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move money by transferring to account w lower interest rate
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balance trasfer
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2-3%
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average minimum payment
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what you owe the CC Co. that mo.
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new balance
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Equifax, transunion, experian
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credit score companies/bureus
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35% payment history 30% amounts owed - less of available credit is better; 15% length of credit history; new credit 10% how often checked by lenders types of credit used 10% - mix of types
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components of credit score
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credit checks that show up on your credit report. This is when someone checks your credit to make a lending decision (like when applying for a mortgage)
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hard inquiries
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return on investment (education)
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ROI
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you must demonstrate financial need.
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subsidized loan
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must pay interest that accrues during school
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unsubsidized loan
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money you save for higher education, tax benefits
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529 Savings Plan
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what you receive after you send in your FAFSA
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Student Aid Report
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fee for moving out early when renting
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breaking lease fee
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LOAN to buy property
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mortgage
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monthly payment for insurance
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premium
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claim
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request for payment
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out-of-pocket payment toward each claim before insurance, added to premium; amount you must pay in the event of an accident or other claim
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deductible
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(fixed fee for covered medical services
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co-pay
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charges on profit made from selling something at a higher price than you bought it
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capital gains tax
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YTD (year to date), taxes witheld, medicare tax (65+), social security tax (retirement), state income tax, deductions, 401(K) (optional retirement savings plan sponsored by employer)
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paystubs
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W-2, W-4, 1040EZ
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internal revenue service
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April 15
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tax return date
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start new job, how much money you want to with hold from federal taxes, keeps from overpaying taxes
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W-4
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sed in simple tax situations unless homes/stocks, amount income tax owed to the IRS
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1040EZ
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every year shows how much $ made, and how much paid in taxes to fill out tax form
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W-2
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impersonate bank representative
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phishing scam
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call co that reported charge
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first thing after identity theft
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protects from unfair business practices
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federal trade commission
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regulates financial products and services
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consumer financial protection bureau
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Fair Credit Reporting Act
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mandates that the info in credit report is accurate, complete, private; can view credit report and dispute incorrect info
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increases transparency, makes CC Co. make fair practices, restricts on when they must provide your credit card bill, accepts payments, notify when change in fees/rates
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Credit Card Accountability Act of 2009
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aims at doing away w abusive practices from debt collectors
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Fair Debt Collection Practices Act
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received through your employer, opt in means money from paycheck to account automatically=less taxes, some employers match
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401/403(K)
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pay taxes now, 5 yrs can withdraw wout fee
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roth
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taxes paid later
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IRA
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brokerage account
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deposit $
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issued by US gov
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treasury bond
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state, country, city gov (loan $ to town)
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municipal bond
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way of reducing risk, mix of different stocks and bonds chosen by fund manager, helps diversify portfolio
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mutual funds
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tracks overall performance of the market or certain investment types or group of stocks
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index fund
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NYSE, NASDAQ (National Assosiation of Securities, Dealers Automated Quotations; online), S&P 500 (measures overall performance, 500 companies), Dow Jones Industrial Average (looks at performance of 30 of best cos in US)
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Stock Exchanges and Indexes
