National Personal Finance Challenge 200 Words by Rishik/Mahith

Commercial bank

For-profit institution offering full range of financial services: checking, savings, and lending.

Credit union

Nonprofit financial institution owned by its members and organized for their benefit.

Savings & loan association (S&L)

Financial institution specializing in savings accounts and mortgage loans.

Mutual savings bank

Specializes in savings accounts and mortgage loans; may offer better rates than commercial banks.

Cyber bank

A bank with no tellers or physical branches — operates entirely online.

FDIC

Federal Deposit Insurance Corporation; insures each bank account up to $250,000 at federally chartered banks.

NCUA

Insures deposits at credit unions, similar to how FDIC covers commercial banks.

Federal Reserve

One of 12 regional banks providing services to commercial banks; the central bank of the U.S.

Checking account

Account you can draw funds from by withdrawal or check; most common payment service.

Savings account

Account that earns interest; liquid and federally insured but lower rate than alternatives.

Money market account (MMDA)

Variable-rate savings account with check/ATM access; requires minimum balance.

Certificate of deposit (CD)

Savings with fixed rate for a set period; higher interest but early-withdrawal penalty.

Money market mutual fund (MMMF)

Pool of investments earning interest; not FDIC-insured but diversified.

ATM

Automated Teller Machine; allows cash withdrawal from an account electronically.

Debit card

Card that withdraws money directly from your checking or savings account.

Direct deposit

Electronic deposit of net pay directly into an employee's designated bank account.

Online banking

Check balances, transfer funds, and pay bills via internet access to your accounts.

Overdraft protection

Automatic loan made to an account if the balance won't cover checks written.

Bank reconciliation

Report that accounts for differences between the bank statement and your checkbook balance.

Stop-payment order

Request that a bank not cash a particular check.

Endorsement

Signature of the payee on the back of a check; required before cashing or depositing.

Blank endorsement

Signature only — check can be cashed by anyone who holds it.

Restrictive endorsement

'For Deposit Only' plus signature — limits how check can be used.

Special/full endorsement

'Pay to the Order Of [name]' — transfers check to a specific person.

Chapter 13 bankruptcy

Debtor proposes a 3-5 year repayment plan; usually keeps most property.

Garnishment

A portion of wages taken by court order to repay a debt.

Repossession

Lender takes back goods bought on credit when payments haven't been made.

Debt-to-income ratio

Suggested limit of debt payments to income is 20%.

Fair Credit Reporting Act

Regulates credit reports; requires deletion of outdated info; gives consumers file access.

Fair Credit Billing Act

Allows you to dispute billing errors; creditor must respond within 30 days.

Equal Credit Opportunity Act (ECOA)

Prohibits credit discrimination based on race, sex, age, marital status, etc.

Fair Debt Collection Practices Act

Prohibits abusive practices by debt collectors.

Consumer Credit Protection Act

Limits your liability to $50 if someone uses your card illegally.

Redlining

Illegal practice of denying mortgages or insurance to certain geographic areas.

Identity theft

Criminal use of your personal information to make purchases or open accounts in your name.

Secured credit card

Credit line secured by a deposit you make; used to build or rebuild credit.

7 years

How long most negative information stays on your credit report before being removed.

Mortgage

Debt owed on a loan for a home or real estate; making payments increases net worth.

Stock

Security representing ownership in a corporation and a claim on its profits or losses.

Common stock

Ownership with voting rights for board of directors; no guaranteed dividend; more volatile.

Preferred stock

Guaranteed dividend if declared; less volatile than common; no voting rights.

Bond

Debt instrument where you lend money to a borrower (government or corporation) for a set period at interest.

Municipal bond

Security issued by a local government or its agencies.

U.S. Savings Bonds

Safe, low-risk Treasury products; Series EE face value doubles at maturity.

Mutual fund

Pool of investor funds managed by professionals; invests in stocks, bonds, and other assets.

Balanced fund

Mutual fund with investments in a mix of stocks and bonds.

REIT

Real Estate Investment Trust; corporation or trust that invests in and manages real estate.

IPO

Initial Public Offering; the first sale of a company's stock to the public.

Whole life insurance

Life insurance guaranteed to stay in force for the insured's entire lifetime as long as premiums are paid.

Health insurance

Coverage for medical expenses; most likely to be paid (at least partly) by an employer.

Casualty insurance

Protects you from lawsuits and liability claims.

SR-22

Liability insurance certificate required by courts for certain driving-related violations.

Higher deductible effect

Choosing a higher deductible lowers your insurance premiums.

Insurance agent

Licensed person who sells insurance policies and represents insurers or insureds.

Underwriter (insurance)

Evaluates and assumes the risk of insuring a person or asset.

Fiduciary

Person who undertakes a high level of trust when acting in another's interest.

Rebating

Illegal practice of offering anything of value as an inducement to buy insurance.

Twisting

Misrepresenting policy terms to induce a policyholder to lapse or surrender existing coverage.

Redlining (insurance)

Illegally denying insurance coverage based on geographic area.

Defamation (insurance)

False or derogatory statement about an insurer's financial condition circulated to injure.

Risk manager

Licensed professional who assesses and advises on risk reduction for insurance purposes.

Controlled business

Agents who only insure people they control (family, business) rather than the general public — prohibited.

MGA

Managing General Agent; supervises local agency and field operations of an insurance company.

Surplus lines agent

Sells insurance for risks that standard insurers won't cover; must hold a general P&C license.

Temporary license

90-day insurance license for someone being considered for full appointment; no exam required.

CE requirements

All agents must complete 30 hours of continuing education every 2 years, including 2 hours of ethics.

Unfair claims practices

Includes misrepresenting coverage, failing to respond within 15 days, or not investigating claims.

Fraud (insurance)

An attempt to deceive an insurer; must be reported to TDI within 30 days.

Rural vs. city premiums

Rural drivers typically pay lower auto insurance premiums than city drivers.

ISR (insurance service rep)

Salaried employee who explains coverage and quotes premiums in a P&C agent's office.

License renewal

Insurance licenses renew every 2 years; lapsing over 90 days requires a new license.

Gross pay

Total earnings before any deductions are taken out.

Net pay

Amount left after all taxes and deductions are removed from gross pay.

W-2

Form employer sends in January showing annual earnings and taxes withheld.

W-4

Form employee completes to tell employer how much tax to withhold each pay period.

1040

Standard tax return form; use if you want to itemize deductions.

1040EZ

Simplest tax form; used for straightforward tax situations.

FICA

Tax on wages funding Social Security and Medicare; paid equally by employee and employer.

Asset

Anything of value owned by an individual or company, such as cash, investments, or real estate.

Liability

A financial debt or obligation that must be paid, such as a loan or credit card balance.

Net Worth

The total value of all assets minus the total value of all liabilities.

Budget

A financial plan that tracks income and expenses over a specific period to manage spending.

Compound Interest

Interest calculated on the initial principal and also on the accumulated interest of previous periods.

Inflation

The rate at which the general level of prices for goods and services rises, eroding purchasing power.

Diversification

An investment strategy of spreading capital across various assets to reduce risk.

Liquidity

The ease with which an asset can be converted into cash without affecting its market price.

Capital Gain

The profit realized from the sale of an asset that has increased in value.

Dividend

A portion of a company's earnings distributed to shareholders.

Bear Market

A market condition where securities prices fall 20% or more from recent highs, often accompanied by widespread pessimism.

Bull Market

A market condition where securities prices are rising or are expected to rise, typically associated with economic growth.

401(k)

A retirement savings plan sponsored by an employer that allows employees to invest a portion of their paycheck before taxes.

IRA (Individual Retirement Account)

A tax-advantaged account that helps individuals save for retirement on a long-term basis.

Roth IRA

A retirement account where contributions are made with after-tax dollars, allowing for tax-free withdrawals in retirement.

APR (Annual Percentage Rate)

The annual rate of interest charged for borrowing or earned through an investment, expressed as a percentage.

Credit Score

A numerical expression based on a level analysis of a person's credit files, representing their creditworthiness.

FICO Score

The most common type of credit score used by lenders to assess the risk of lending money to a consumer.

Fixed Expense

A cost that does not change from month to month, such as rent or insurance premiums.

Variable Expense

A cost that fluctuates based on usage or consumption, such as groceries or utility bills.

Emergency Fund

A savings account containing enough money to cover 3-6 months of living expenses for unexpected events.

Equity

The value of an ownership interest in property, such as the difference between a home's market value and the mortgage balance.