SPF banking study guide

bank

A financial institution that accepts deposits from the public, offers loans, and provides various financial services.

credit union

a member-owned financial cooperative that offers banking services and rates typically lower than traditional banks.

online banks

Digital financial institutions that operate exclusively on the internet, offering services such as savings and checking accounts.

FDIC

federal deposit insurance corporation - insures deposits at the bank

NCUA

national credit union association - insures deposits at credit unions

check cashing

allows people without banks or people who need the cash immediately to deposit checks, usually with a small fee

payday loan

a loan at a high rate of interest on the agreement that it will be repaid when the borrower receives their next paycheck

ATM

Automated Teller Machine - allows for financial transactions

overdraft protection

when one does not have enough money in their account to purchase something, the bank covers the difference and charges a small fee

maintenance fees

automatic fee deducted if all requirements for the bank are not met

bank statement

summarizes all transactions

mobile banking alerts

notifications sent to you to help manage your account

traditional savings account

allows you to withdraw and deposit funds while earning interest, usually at a lower rate

certificate of deposit (CD)

an account where you typically earn a higher interest rate but the money is deposited for a set amount of time and cant be withdrawn

money market account

usually offers a higher interest rate and has limited access to money in the account and often requires a higher minimum balance.

interest rate

percentage chared on a loan or paid on an investment

compounding interest

when the interest earned is added back to the principal, and then the next period's interest is calculated on the new, larger balance