Personal Finance Chapter 5 – Flashcards
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trust
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a legal agreement that provides for the management and control of assets by one party for the benefit on another
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asset management account
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an all-in-one account that includes savings, checking, borrowing, investing, and other financial services for a single fee; aka cash management account
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automatic teller machine (ATM)
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a computer terminal used to conduct banking transactions; aka a cash machine
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debit card
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a plastic access card used in computerized banking transactions; also called a cash card
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commercial bank
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a financial institution that offers a full range of financial services to individuals, businesses and government agencies
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savings and loan association (S&L)
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a financial institution that traditionally specialized in savings accounts and mortgage loans
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mutual savings bank
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a financial institution that is owned by depositors and specializes in savings accounts and mortgage loans
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money market fund
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A savings-investment plan offered by investment companies, with earnings based on investments in various short-term financial instruments
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share account
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a regular savings account at a credit union
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certificate of deposit (CD)
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a savings plan requiring that a certain amount be left on deposit for a stated time period to earn a specified interest rate
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money market account
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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
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rate of return
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the percentage of increase in the value of savings as a result of interest earned; also called yield
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compounding
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a process that calculates interest based on previously earned interest
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annual percentage yield (APY)
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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
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share draft account
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an interest-bearing checking account at a credit union
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overdraft protection
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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
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credit union
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a user-owned, nonprofit, cooperative financial institution that is organized for the benefit of the members
