unit 4 - banks, credit, and risk

Bank

A place that keeps your money safe and provides financial services.

Credit union

A member-owned financial institution that offers banking services.

Checking account

An account used for everyday spending and paying bills.

Savings account

An account used to save money and earn interest.

Deposit

Putting money into an account.

Withdraw

Taking money out of an account.

Transfer

Moving money from one account to another.

Debit card

A card that uses money directly from your bank account.

Credit

Borrowed money that you must pay back.

Credit report

A record of your borrowing and payment history.

Credit Bureau

A company that collects and reports credit information

Credit Score/FICO

A number that shows how responsible you are with credit.

Debt-to-income ratio

The percentage of your income that goes toward paying debt.

Credit Card

A card that lets you borrow money and pay it back later.

Revolving Credit

Credit you can borrow from again as you pay it back.

Annual percentage rate (apr)

The yearly cost of borrowing money, including interest and certain fees.

Interest

Money paid for borrowing money or earned from saving.

Fees

Extra charges for using a financial service.

Creditworthiness

How likely you are to repay borrowed money.

Cash flow

Money coming in and going out.

Minimum payment

The smallest amount you must pay on a credit card each month.

Installment loan

A loan paid back in regular payments over time.

Repayment

Paying back borrowed money.

Collateral

Something valuable used to secure a loan.

Debt

Money that you owe.

Payday loan

A short-term, high-interest loan usually due on your next payday.

Auto loan

Money borrowed to buy a vehicle.

Lease

An agreement to pay to use something for a set amount of time.

Mortgage

A loan used to buy a house.

Fixed-rate mortgage

A mortgage with an interest rate that stays the same.

Variable-rate mortgage

A mortgage with an interest rate that can change.

Down payment

Money paid upfront when buying something expensive.

Private mortgage insurance (pmi)

Insurance that protects the lender if the borrower stops paying.

Asset

Something you own that has value.

Liability

Money or debt that you owe

Net worth

The value of what you own minus what you owe.

Insurance

Protection against financial loss.

Premium

The amount paid for insurance coverage.

Deductible

The amount you pay before insurance starts covering costs.