Chapter 2: Smart Savings

Flashcards covering the vocabulary and key concepts from the Smart Savings lecture notes.

Savings

is the part of your income, after taxes, that you put aside for the future instead of spending right away.

Financial Institutions

help keep your money safe while providing access to it when needed, often insured by a government agency or private insurer, and may pay interest.

AFS

Alternative Financial Services: includes payday loans, non-bank check cashing, pawn shops, etc.

APR - Annual Percentage Rate

Represents the rate of interest you are being paid on your savings over a year's time.

APY - Annual Percentage Yield

Can be the same as APR unless the interest on your savings is applied more frequently than annually.

ATM

Automated teller machine.

Balance

The amount of money you have in a bank account.

Brick-and-mortar

A physical customer service location, or "branch", of a bank

Certificate of Deposit (CDs)

A method of savings offered by banks that comes with a fixed term (6 months to five years) and a fixed interest rate; penalties apply for early withdrawal.

Compound Interest

Interest paid on your original deposit and on the interest it has earned; applied annually, quarterly, monthly, or daily.

Credit Union

A financial institution owned by its customers, who are considered "members"; operates like banks but as not-for-profit institutions.

Debit Card

A purchase card that pays for a transaction by deducting the cost directly from your bank account.

Deposit

A sum of money placed or kept in a bank account, usually to gain interest.

Direct Deposit

When your paycheck, transfer payment, or refund are automatically deposited into your checking or savings account.

FDIC

Federal Deposit Insurance Corporation; insures bank accounts up to $250,000.

Federal Reserve Bank

The central banking system of the United States.

Fee

A charge to the customer by the bank for a service such as writing a check or using an ATM.

Insufficient Funds

Not having enough money in a checking account to pay the check (or debit card or other transaction).

Internet Bank

A bank that does not have physical branches; all transactions with customers are done online.

Interest

The amount of money paid to a customer by the bank for keeping the customer's (savings) money.

Joint Account

A bank account shared by two or more people who are official signatures on the account.

Minimum Balance

The amount of money required to be held in an account to receive a higher interest rate or avoid paying a service charge.

Mobile/Online Banking

The ability to engage in bank transactions through your internet-connected device.

National Credit Union Administration (NCUA)

The government agency that insures deposits at federal credit unions for up to $250,000.

Opening Deposit

The amount of money required as a deposit when opening a new account.

Overdraft

Writing a check for more money than you have.

Ownership Category

The type or title of the account you have at a financial institution.

Quarterly

The idea of dividing a year into "quarters" or once every 3 months. Usually indicates the last day of March, June, September, and December.

PIN

personal identification number (for use with ATM and debit cards)

Rule of 72

72 divided by the interest rate will tell you how many years it will take your investment to double.

Telephone Banking

using a financial institution's voicemail system to manage your account.

Thrift

A mutual savings bank or a savings and loan institution; specializing in savings accounts and mortgages.

Withdrawal

The act of taking money out of a bank account, or the amount of money taken out.