resource manag. test 2

3 types of banks

commerical, credit union, and savings and loans

what is the truth in savings act

helps consumers compare savings plans

-advertising and materials describing savings plants must include APY + APR

overdraft protection

automatically transfers or advances funds from linked backup account to cover transactions when your checking account balance is low

insurance organizations that insure banks

FDIC

purpose of life insurance

protect familily or individual in case of deceasement

what companies are riskier to loan from

finance and loan companies

-payday loan and finance (high int. rate fees)

financial supermarket

one stop place for all financial needs

CD

deposited set amount of money for set period of time

-pays higher rate eof interest

longer time periods earn slightly higher interest

simple vs compound interest

simple- determined by multiplying int. rate by principal by # of periods PxIxN (p-loan amt, I-int. rate, N-duration of loan)

rule of 72

divide 72 by % of interest (earned on savings) to see how long it will take for it to 2x

apr vs apy

apr-annual percentage rate; finance charge calculated as % borrowed. I fine int. rate spread out over time of loan

apy- annual percentage yield- actual int. earned when compounding is added (actual int. rate an acc. pays per year)

4 checking accounts

minimum balance- cannot drop below specified amount

negotiable order of withdrawal- (NOW) earn int. on deposited funds 7 days notice of withdrawal

free checking- offer free checking as a way to attention and save you money; require a small deposit in order to open the account -offer free checks for life

money market- int bearing account, rate little less than CD, write 3 check minimum for 250

what is a check/money order account + services

account- financial service used by many consumers

money order- purchased and written to payee; can be purchased at gas station,

all types of checks

cashier’s check- bank check drawn on the bank’s funds; signed by a bank official; purchased to make a payment to someone you don’t know well; SIGNED AND OFFICATED BY BANK

certified check- [personal check on your account; bank certifies that the check will be paid; funds are immediately subtracted from the account to cover the check; used to make payment to someone who does not want a personal check; can be used when putting a down payment on a car or home

money order- purchased and written to payee; can be purchased at gas station,

travelors checks- used when don’t want to carry a lot of cash; can report if lost or stolen

why do people use checking accounts

reduces the need to carry large amounts of cash

convience- useful for paying bills

spending plan tool- record of where money is spent

safety- using checks is sfaer

what is bouncing a check

when you pay using a check and do not have the sufficient amount of funds withint the account

where to record monetary account

check register

when do you sign a check?

when you arrive at the bank

3 types of endorsements

blank- signature

restrictive signature and for direct deposit only

special (full) signature and pay to the order of…

how often do you reconcile

monthly

benefits of a credit union

company is reinvested into its members / distributed

check terms/diagram

caluclate simple int

PxIxL (check)

what is an EFT

electronic funds transfer

savings and loans accounts are primarily used in what

real estate

bank statements

review monthly- determine current account balance