Personal Finance Unit 2

Interest

Interest

The amount you earn as a benefit of depositing money in an interest bearing account

Maintenance Fee

A monthly fee that some banks charge to provide access to checking or savings accounts

Money Market Savings Account

A type of savings account that may allow debit card and check writing privileges

Inflation

The rate at which the price of goods increases and consumer purchasing power decreases over time

Impulse Buying

The buying of goods without planning to do so in advance, as a result of a sudden whim or urge

Living Paycheck to Paycheck

Using most or all of your monthly income to cover your monthly expenses, leaving little to no spare cash for saving or investing

Minimum Balance

A certain amount of money that must be kept in an account as required by that particular financial institution

50-20-30 Rule

A popular savings rule of thumb in which 50% of your income goes towards necessities, 20% goes towards saving and debt repayment, and 30% goes towards flexible spending

Certificate Of Deposit (CD)

A bank product that earns interest on a lump-sum deposit that's untouched for a predetermined period of time

Compound Interest

Reinvesting earned interest back into the principal to allow money to grow exponentially over time

Direct Deposit

An automatic electronic deposit of net pay to an employee's designated bank account

Emergency Fund

Money set aside for unanticipated expenses or loss of income

Federal Deposit Insurance Corporation (FDIC)

The government agency that insures customer deposits if a bank fails up to $250,000 per individual depositor

Online Savings Account

A type of savings account, typically offering higher interest rates, that is managed entirely online with no physical bank branch

Pay Yourself First

A method of saving whereby you put a fixed amount of income into a savings account before you pay monthly bills or make purchases

Purchasing Power

The number of goods and services that money can buy. It can weaken in time due to inflation

Simple Interest

Interest paid on the principal alone

Transaction Fee

A fee that is charged if the number of withdrawals from your savings account exceeds the federal limit, which is six free withdrawals and transfers per month

Wealth

A measurement of your assets (money you've saved or things of value you own) minus your liabilities (money you owe others); also called net worth

Unbanked

An individual or household that does not utilize putting their money in a checking or savings account

Underbanked

An individual or household that has a bank account but lacks adequate access to other traditional financial services, such as credit and loans

Overdraft Fee

A fee charged by the bank for lending you money when you overdraw your account

Checking Account

A bank account from which payments can be ordered by a depositor

Savings Account

A bank account that accumulates interest