SPFC 2

Bank

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

Credit Union

A member-owned financial cooperative that provides traditional banking services such as savings and loans.

Online bank

A type of financial institution that operates primarily on the internet, providing banking services without traditional physical branches.

FDIC/NCUA

Federal insurance for deposits

Check cashing

A service that allows individuals to cash checks without needing a bank account, often charging a fee for the transaction.

Payday loan

a short-term, high-interest loan designed to cover emergency expenses until the borrower receives their next paycheck.

ATM

Automated Teller Machine, allowing users to perform banking transactions.

Overdraft protection

A banking service that prevents transactions from being declined due to insufficient funds by allowing the account holder to exceed their balance up to a certain limit.

Maintenance fees

charges that banks may impose for account management or maintenance.

Bank statement

A document summarizing an account's transactions and balance over a specific period.

Mobile banking alerts

Notifications sent via text or app to update account holders about transactions or account activity.

Traditional Savings Account

A standard type of savings account offered by banks that typically earns interest and allows for limited withdrawals.

Certificate of Deposit (CD)

A savings product offered by banks with a fixed interest rate and maturity date that requires funds to be kept deposited for a specified period.

Money Market Account

A type of savings account that typically offers higher interest rates than a traditional savings account and allows limited check writing and debit card access.

Interest rate

the amount charged or paid for the use of money, typically expressed as a percentage.

Compounding interest

is the process of earning interest on both the initial principal and the interest that has been added to the account. This practice can significantly increase the amount earned over time.

How are banks and credit unions similar and how are they different?

Both institutions provide financial services such as savings and loans, but banks are profit-driven entities owned by shareholders, while credit unions are nonprofit organizations owned by their members and often offer lower fees and better interest rates.

How is your money protected in a bank/credit union?

Both banks and credit unions are federally insured, protecting depositors' funds up to a certain limit. However, they differ in ownership, governance, and services offered.

What are some of the dangers of being “unbanked?”

Dangers include higher costs of transactions, lack of access to credit, and increased vulnerability to theft or scams.

How do checking accounts work? How can you move funds in and out of a checking account?

Checking accounts allow customers to deposit and withdraw money for daily transactions. Funds can be moved in and out through methods such as checks, debit cards, electronic transfers, and direct deposits.

How do you write a check?

Writing a check involves filling out the date, payee, amount in numbers and words, and signing the check. It allows you to transfer funds from your checking account to the payee.

How do you read and understand a bank statement?

A bank statement is a summary of all transactions in a checking or savings account over a specific period, detailing deposits, withdrawals, fees, and the account balance.

How can you use online banking to manage your funds and avoid certain fees?

Online banking allows you to check balances, transfer funds, pay bills, and manage transactions, helping you avoid overdraft fees and maintain financial control.

What are some of the different types of savings vehicles? What are the advantages/disadvantages of the different types of accounts?

Savings accounts, money market accounts, and certificates of deposit are common savings vehicles, each with varying interest rates, liquidity, and risk levels.

What are the advantages of starting to save early on in your life?

Starting to save early allows you to benefit from compound interest over time, leading to greater savings growth. It also promotes better financial habits and provides a safety net for future expenses.

How does compounding interest work and how does it advantage early saving?

Compounding interest allows your savings to grow exponentially over time, as interest is earned on both the initial principal and the accumulated interest. This means that starting to save early can significantly increase your total savings compared to waiting.