Consumer Education Final

Pay to the order of:

Payee Line

Bottom Left #

Bank’s ABA Routing #

Bottom Center #

Account #

Standard Deposit Insurance

Safety and Protection

Cash check for customers issued in that bank, cashing fee for non-member

Convenient and Free Check Cashing

Businesses allow for automated bill pay

Convenient and Free Bill Pay

Avoiding carrying large sums of money

Debit Card Convenience

Automatically tracked on bank accounts

Budgeting Tools

Lower fees and better interest rates on savings accounts and loans

Credit Union

Mobile apps and online technology tend to be more advanced; more branches and ATM’s nationally

Local and Federal Bank

Shows you all the deposits and withdrawals from your account

ctement

Shows you terms and conditions of account such as fee structure and minimum requirements

Checking Agreement

Bank branch, ATM, direct deposit from employer, electronic transfer, mobile app, 3rd party payment

Accessing Account

Making a withdrawal when there is not enough money in account to pay for it

Overdraft fees

Printed record of balance in a bank account and amount paid of withdrawn from last 30 days

Bank Statement

Account that doesn’t have enough money to cover transactions

NSF or balanced checks

Hourly rate, most common for part-time jobs

Wages

Monthly/Annual amount you receive regardless of time worked; professional positions

Salary

Some or all income based on productivity % of every sale you make

Commision

Direct payment below minimum wage and make minimum wage if employer need to make up difference

Tips

Verifies identity and employment authorization of individual hired for employment (employee)

I-9

Determines how much should be withheld from your paycheck for federal income taxes; tax situation (employee)

W-4

Determines whether someone pays additional taxes or receives a tax refund; annual wages and taxes withheld (1/31; by employer)

W-2

Reports non-employee compensation, pay from independent contractor; taxes not withheld (1/31)

1099 NEC

Used by taxpayers to file annual income tax return by online, professional, or paper (IRS form; refund=overpaid, 4/15)

1040

Wages before taxes and other deductions

Gross Pay

Wages after taxes and other deductions

Net Pay

Federal Law that requires an employer to withhold taxes from wages they pay their employees; funds go toward social security and Medicare

FICA

Amounts withheld from your wage/salary involuntarily for federal, state, and FICA taxes (IL- 4.95%)

Withholdings

Individuals who depend on you for financial support; set amount of money claimed as deduction per dependent

Dependents

You deduct a flat-dollar amount, less effort, reduces taxable income, saves you more than itemizing single, head of house, married

Standard Deduction

You report each qualified deduction, complete schedule A forms, reduce taxable income, could save you more than standard deduction mortgage interest, charitable donations, medical expenses, state and local tax.

Itemize Deduction

Earns less than $12,950, Unearned less than $1,150, gross income larger of $1,150 or income +$400

Dependent

Earned income of more than $12,950

Non-dependent

Net earnings from self-employment were more than $1,400, IRA’s cannot be exceeded taxable compensation, max $6,000/yr for tax year

File for taxes

Top three cost categories

Housing, Taxes, Transportation

Benefit profit or value of something that must be given up to acquire/achieve something else. Trading off something for another

Opportunity Cost

Process of planning how to get the most of your income

Money Management

Money spent by consumers on things other than necessary things like food, clothing, fuel

Discretionary Spending

50% goes to Fixed Expenses (mortgage/rent, utilities, insurance, etc), 20% to Savings (financial goals), and 30% to Fun (entertainment, hobbies, travel, etc.)

Budgeting Rules of Thumb

Plan for spending and investing you money to meet your needs and wants (meet short and long term goals)

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* Identify current income spending
* Set goals and budgeting
* Track spending and make adjustments

Budgeting Process

Occurs when income exceeds expenditures

Budget Surplus

Occurs when expenses exceed revenue

Budget Deficit

A contract between the insurance company and the insured that states the exact terms of policy

Policy

The risk covered and amount of money paid for losses under an insurance policy

Coverage

Person who owns the insurance policy

Policy-holder

Money paid to purchase the policy

Premium

* Event occurs resulting in loss
* Policy holder makes a claim to insurance organization
* Insurance organization determines if event is covered by policy
* Policy holder pays deductible
* Remaining money is payed by co-insurance (if applicable)

Insurance Process

Formal request to insurance company asking for payment when policy holder has an accident, illness, injury

Claim

out of pocket money paid by policy holder before insurance will cover remaining cost

Deductible

Chance of loss from an event that cannot be controlled

Risk

* Individual (long term care, property, liability)
* Employer (health, disability, life insurance)
* Federal (catastrophes)

Source of Insurance

Average percentage of cost paid by insurer each year

Actuarial Value Paid

Provided by employer or federally (doctors visits, hospital bills, procedures, etc.)

* Bronze (60%)
* Silver (70%)
* Gold (80%)
* Platinum (90%)

Health Insurance

Only in-network care, primary doctor, and low cost

HMO and EPO

No referral, out of network, more expensive

PPO

Payment for liability and property insurance on a vehicle

Automobile Insurance

Payment to cover liability losses and damages/ loss of home structure and its contents

Homeowners Insurance

Payment for damage/loss of property in rental unit in addition to liability losses

Renters Insurance

Payment to replace earnings during times when workers cannot work due to illness/injury

Disability Insurance

Payment for extended nursing care when they cannot live independently

Long-term Insurance

Money received when insured person dies

Beneficiary

Amount of loan $

Principal

Cost of borrowing

Interest

How long to pay back in months/years

Loan Term

Cost you pay each year to borrow money, including fees, expressed as a percentage

APR (Annual Percentage Rate)

Changes and is based on the prime rate or index rate

Variable Rate

Remains the same for the length of the loan

Fixed Rate

Used to finance specific purchases for an amount of time (regular payments/same total)

Installment Loans

Open line of credit that can any purchases as long as you are under the credit limit (vary/based on size)

Revolving Credit

Debt that can used as collateral and repossessed if borrower doesn’t make payments (low interest/less risky)

Secured Debt

Interest isn’t charged if balance is paid in full

* 20-30 days
* N/A if you have a balance

Grace Period

Money that will be charged minimally if you carry balance

Minimum Finance Charge

A numeric score that uses credit history to asses creditworthiness

Credit Score

% charged on the amount you owe

Interest Rate

Amount owed on an existing lone of credit

Balance

List of your credit usage history

Credit Report

Minimum amount owed each month to keep credit in good standing

Minimum Monthly Payment

Fair Issac Corporation

FICO

Payment history, amount owed, length of credit history, new credit, types of credit used

Credit Ties

Insurance rates, Employment, Public Utility Services, Housing

Credit History Affects

Consumer, Credit Account Information, Public Record Information, Inquiry Information

Credit Report Categories

Organizations that collect credit information on individual consumers (Equifax, TransUnion, Experian)

Credit Bureaus

Crime in which someone wrongfully obtains and uses another person’s personal data in some way that involves fraud or deception typically for economic gain

Identity Theft

SSN used to open new utility, cell phone, credit card accounts, etc.

New Account Fraud

Using account numbers like credit card numbers to extract funds from bank account

Account Takeover Fraud

Commits crime under another name, fake ID with victim’s information but imposter picture

Criminal Identity Theft

Using another person’s name/insurance to obtain medical services and goods, effects medical record

Medical Identity Theft

Using business name to obtain credit and billing clients for products and services

Business/Commercial Theft

Living and functioning as victim on purpose; running from the law, evading child support, mentally ill

Identity Cloning

Looking through old bills, financial statements, etc to get name, address, account number, bank name, etc.

Trash

Stealing mail is how criminals take advantage of credit card offers, open account information, and going on a spree

Mail

E-mails with phony finance institutions or friends asking for money. Cyber criminals deceive consumers with opening these e-mails.

Phishing

Thieves manipulate credit card processes and ATM’s with device that captures account information

Skimming

Paper-thin, card sized shim with microchip and flash storage in card slot, unseen to get data off credit and EMV

Shimmer

Stealing purses, pit-pocketing in crowed places, stealing personal records

Straight Theft

Spam calls to get information to fill out financial applications, address form, or paperwork to replace drivers license

Conning

“verifying” your identity when changing your address by giving credit/debit information to charge you to test new address, diverts mail and gains aspects

Address Minipulation

Two-factor authentication against phishing, credential exploitation, and other attempts to takeover your accounts

* Password
* Proof
* Access

2FA

* File an initial fraud alert
* Initiate a credit freeze
* File and identity theft report
* Contact credit bureaus and businesses
* Place an extended fraud alert

When identity is stolen