Chapter 7 - Banking

Pawnshops

offer payday loans with high finance charges to desperate borrowers

Savings and loan association

a financial institution that is owned by its members

Demand deposit

money in a checking account

Debit cards

an immediate and convenient way to take money from your account as an alternative to carrying cash

Prepaid cards

credit cards that can be used for different companies and are not connected to any checking or savings account

Endorsement

the signature of the payee on the back of a check

Commercial bank

a for-profit institution that offers a full range of financial services

Annual percentage yield(APY)

the amount of interest that a financial institution would pay on a $100 deposit after compounding for one year

Rate of return

the percentage of increase in the value of savings from earned interest

Compounding

the process in which interest is earned on both the principal and any previous earn interest

Credit union

a non-profit financial institution that is owned by its members and organized for their benefit

Money market account

a savings account in which the interest rate varies as Market rates change

Certificate of deposit(CDs)

a savings alternative in which money is left on deposit for a stated amount of time to earn a specific rate of return

Direct deposit

an automatic deposit of an employee's paycheck into a designated bank account

FDIC - Federal Deposit Insurance Corporation

insures depositors against losing their money in the case of a bank failure

Credit cards

allows you to borrow money for a short-term

CDs

is one of the best ways suited for savings money over a period of years

Problematic financial business

check cashing outlets, pawn shops and rent-to-own centers

Stop payment order

is a request that a bank or other financial institutions not cash a particular check

Overdraft protection

is an automatic loan made to an account if the balance will not cover the checks written

Commercial bank

Privately owned financial institutions authorized to conduct business through a charter granted by the federal or state government

Blank endorsement

you of the check holder signs the back of the check

Restrictive endorsement

requires the check holders signature and a restriction on how the paper may be used by the bank

Special endorsement

allows you to transfer a check to an organization or another person

Authorization

permission

Issuers

providers

Quarterly

every 3 months

Reconciliation

a report that accounts for the differences between the bank statement and a checkbook balance

Certified check

a personal check with a guaranteed payment

Cashiers check

a money order from a financial institution

Money order

you pay the amount of the check or money order plus a fee

Travelers check

allow you to obtain cash in a country’s currency when you are away from home