pfl 3 test review

direct deposit

direct deposit

is an electronic payment method that allows funds to be transferred directly into a bank account, eliminating the need for paper checks.

What is an amortization schedule?

An amortization schedule is a table that outlines each payment on a loan over time, detailing the principal and interest portions of

What is an overdraft in banking?

An overdraft is a financial situation that occurs when a bank account balance goes below zero, allowing customers to withdraw more money than they have in their account, typically up to an agreed limit.

What is an IRA in finance?

An IRA, or Individual Retirement Account, is a type of savings account that is designed to help individuals save for retirement with tax advantages.

co-signer

is an individual who agrees to take responsibility for loan repayment along with the primary borrower

Collateral

is an asset that a borrower offers to a lender to secure a loan.

secured loan

is a type of loan that is backed by collateral, which is an asset pledged by the borrower to the lender.

unsecured loan

is a type of loan that does not require collateral.

payday loan

is a short-term, high-interest unsecured loan that is typically due on the borrower's next payday

premium

an additional cost or fee associated with a loan or financial product

deductible

is the amount of money that a policyholder must pay out-of-pocket for expenses before an insurance policy begins to pay for covered costs.

What is the difference between a credit report and a credit score?

A credit report is a detailed account of an individual's credit history, while a credit score is a three-digit number that summarizes creditworthiness based on that report.

Name an advantage and disadvantage of using a credit card.

advantage is building credit score disadvantage is overspend easily

Name an advantage and disadvantage of using a debit card. 

advantage use anywhere, disadvantage requires pin

What is the difference between a 401(k) and 403(b)?

401(k) plans are primarily offered to employees in for-profit companies, 403(b) plans are offered to not-for-profit organizations and government employees

How is an IRA different from a 401(k)?

A 401K is a type of employer retirement account. An IRA is an individual retirement account.