Personal Finance EOC Review

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

ATM

Automatic Teller Machine. Allows a person to manage a bank account holder's funds through actions such as withdrawing or depositing money, viewing account balances, etc.

Balance

The amount of money you have in your bank account

Bank Statement

A monthly document prepared by your financial institution which shows all of the transactions related to your account

Certificate Of Deposit (CD)

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

Canceled Check

A check that has been paid or cleared by the bank. It will appear on your bank statement

Check

A written, dated, and signed order to the bank that tells it to pay a definite sum of money to a payee

Checkbook

A handy portfolio that holds your check register, checks, deposit slips, receipts, and other records of ATM/debit card transactions

Check Cashing Store

A business that cashes checks and gives the customer cash in exchange for a fee for the service

Check Register

A record that allows you to keep track of checks you have written, ATM/debit card transactions, as well as deposits and withdrawals

Compound Interest

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

Cost-Push Inflation

Inflation caused by an increase in production costs, but demand is the same

Credit

A sum of money deposited INTO an account

Credit Card

A card that allows the holder to make purchases without cash by borrowing money

Debit

A sum of money deducted FROM your account

Debit Card

A card that is directly connected to your checking account; it enables you to conduct ATM transactions and to make purchases instead of using cash or writing a check

Endorse

To sign the back of a check made out to you so it can be cashed or deposited

FDIC Insurance

Protection provided by the Federal Deposit Insurance Corporation; protects the deposits of customers against loss up to $250,000 per account

Federal Deposit Insurance Corporation (FDIC)

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

Health Savings Account (HSA)

An account in which you can save pre-tax dollars to pay for out-of-pocket health care expenses

Inflation

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

Minimum Balance

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

Monetary Inflation

Inflation caused by growth in the economy's money supply

Money Market Savings Account

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

Money Order

A certificate that allows the stated payee to receive cash on-demand, usually issued by governments and banking institutions

National Credit Union Administration (NCUA)

The U.S. administration insuring deposits in U.S.credit unions against credit union failure 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

Outstanding Deposit

A deposit that has been made but not yet added to the person's bank account

Overdraft Fee

A fee charged to your account when it lacks the funds to cover a withdrawal, but the bank allows the transaction to go through anyway

Overdraft Coverage

A loan banks offer to their customers when they try to withdraw more funds than they have in their account, usually for a fee and with interest

Prepaid Debit Card

A card that is loaded with a specific cash amount before you use it. It is not linked to a bank or credit union account.

Principal

Original amount of money saved or invested, separate from interest or earnings

Reconcile

To compare your bank's monthly account statement with your own records of activity for the same account

Roth IRA

An individual retirement account that allows a person to set aside after-tax income up to a specified amount each year

Rule Of 72

A popular trick to find out how many years it will take your money to double depending on what interest rate you are receiving

Signature Card

A document that financial institutions use to authenticate a customer's signature when opening new accounts. It includes information such as name, birth date, etc.

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

Unbanked

A term used to describe a person who does not use or does not have access to traditional financial services

Underbanked

A term used to describe a person who has a bank account, but often relies on alternative financial services such as check cashing

Adjustable-Rate Mortgage (ARM)

A mortgage in which the initial interest rate is normally fixed for a specified period of time after which it is reset periodically, often every month

401(k) Loan

A type of loan where you borrow money from your retirement savings account. You must pay that borrowed money back, plus interest, within 5 years of taking your loan, in most cases.

Annual Percentage Rate (APR)

The cost you pay each year to borrow money, including fees, expressed as a percentage

Consolidation Loan

A loan that combines two or more education loans into a single loan, allowing the borrower to make a single monthly payment

Down Payment

A partial payment made in cash at the beginning of the purchase of a good or service, while the remaining balance is due later or is financed as part of a loan

Home-Equity Loan

A consumer loan extended to a homeowner that uses the borrower's home as collateral

Installment Loan

Loan used to finance a specific purchase for a specific amount of time, during which regular payments pay the accrued interest and a portion of the principal

Introductory APR

The typically low rate charged during the introductory period after a credit account is opened, after which the regular, typically higher, APR will apply

Point of Sale (POS)

A place where a customer makes the payment for goods or services and where sales taxes may become payable. The transaction can take place through a physical device or online through a digital system.