Econ Savings Vocab

Automated Teller Machine (ATM)

Unattended access to account using account card and PIN.

Commercial Bank

Depository institution that offers services to both consumers and Businesses.

Certificate of Deposit

an account at a depository institution earning higher interest that is used for a fixed period of time and allows restricted access to the funds deposited

Checking Account

Device that allows deposits and withdrawals using checks, debit cards and ATMs.

Checks

Legal documents that function like cash.

Compound interest

Earning interest on interest

Consumption

The purchase of goods and services

Credit Union

Depository Institution owned by its members

Debit card

Plastic card connected to your checking account.

Depository institution

Businesses that provide financial services

Do it yourself (DIY)

When you complete a task yourself rather than paying someone else

Emergency savings

Cash set aside to cover the cost of unexpected events

Interest

Money either gained or lost when accessing services offered by a depository institution. Price paid for using someone else’s money

Interest rate

Percentage rate used to calculate interest, used annually to determine amount gained or lost on Investment.

Liquidity

How quickly and easily assets can be accessed and converted into cash

Money Market Account

An account at a depository institution that usually has minimum balance requirements and tiered interest rates

Opportunity Cost

The value of the next best alternative that must be forgone as a result of a decision

Pay yourself first

Saving for the future by putting money aside before paying regular monthly bills or using income for discretionary purchases

Principal

The original amount of money saved or invested

Personal Identification Number (PIN)

Authorization to access accounts.

Signature Card

Verification of account ownership

Saving

Accumulation of excess funds by intentionally spending less than you earn

Savings

Portion of income not spent on consumption

Savings Account

Most basic savings tools with the lowest interest, designed to hold money not spent on current consumption

Savings tools

Accounts offered by depository institutions whose main purpose is to help people manage their money

Tiered interest rate

The amount of interest earned depends on the account balance

Time value of money

Money available at the present time (today) is worth more than the same amount if received in the future

Trade-off

Giving up one thing for another