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Banking
Banking Notes
51
Business
9th Grade
05/11/2010

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Term
Annual percentage rate (APR)
Definition
the amount you will pay in interest charges per year
Term
Balance transfer
Definition
moving your current debt from one or more credit accounts to a new and, presumably, lower interest rate credit card account
Term
Cash-advance fee
Definition
a fee or charge a credit card holder must pay when he borrow actual money against their current balances.
Term
Cardholder agreement
Definition
the pamphlet that describes in detail the terms and conditions associated with a particular credit card
Term
Finance charge
Definition
the interest added to the balance, service fees for transactions, late fees, and balance transfer fees.
Term
Floor
Definition
the minimum annual percentage rate it will charge
Term
Grace Period
Definition
the time during which you are allowed to pay your credit card bill without having to pay interest
Term
Minimum payment
Definition
the lowest amount of money that you are required to pay on your credit card statement each month
Term
Over-the-limit fee
Definition
A fee charged when your balance goes over your credit limit
Term
Periodic rate
Definition
Finance charge on consumer credit loan balances, expressed as a percentage
Term
Periodic Rate
Definition
The monthly effective interest rate
Term
Teaser rate
Definition
the annual percentage rate charged by the credit card issuer during an initial period
Term
Variable interest rate
Definition
A mortgage with an interest rate that changes periodically
Term
How do banks make money?
Definition
Sell services(banking accounts)
Investing the money from consumers
ATM fees
Term
What does the interest rate a bank charges its borrowers depend on?
Definition
the state of the economy
Term
What are the 4 types of banks?
Definition
Commercial
Savings and loan associations
Mutual Savings Bank
Credit Union
Term
Describe Commercial banks.
Definition
- Full service banks
-Offer all services
-Most operate under FDIC
Term
Describe savings and loan associations.
Definition
Specialize in savings accounts and loans for home mortgages
Term
Describe Mutual Savings Banks.
Definition
-State chartered owned by depositors and run by board of trustees
Term
Where are most mutual savings banks located?
Definition
In America, most mutual savings banks are located in the Northeast
Term
Describe a Credit Union.
Definition
-User owned
-Not for profit
-Formed by people in the same community or company
-Members only
-Provide all regulars services
Term
What are the 4 types of accounts?
Definition
-checking
-saving
-money market
-CD
Term
Describe a CD account.
Definition
-The money in the CD has to stay put for a specified amount of time
-CD’s have a maturity date
-When time is up you can renew it
-If you don’t do it within ten days they’ll renew it with a lower interest rate
-Typically range in three months to five years
Term
Describe a Savings account.
Definition
-Emergency cash
-help you save money for a long-term goal
-provide overdraft protection
-Low minimum balance
-Low or no fees as long as you maintain a certain balance
-Limits on how many withdrawals you may take each month
Term
Describe a Money Market account.
Definition
-Usually pays higher interest
-Higher minimum balance requirements
-Only allow three to six withdrawals per month
-Most will let you write up to three checks a month
Term
What is net pay?
Definition
the remaining amount after deductions from the gross salary
Term
What is gross pay?
Definition
before any usual deductions such as tax or expenses have been made
Term
Simple Interest
Definition
interest on an investment that is calculated once per period, usually annually, on the amount of the capital alone and not on any interest already earned
Term
Compounded Interest
Definition
to calculate or pay interest based on both the principal and the previously accrued interes
Term
Interest
Definition
a charge made for a loan or credit facility, or a payment made by a bank or other financial institution for the use of money deposited in an account
Term
How is the Fed. Is broken up?
Definition
by 12 Districts by number and city
Term
What district are we in?
Definition
Philadelphia
Term
What is the Minimum balances for a savings account
Definition
about $50-$100
Term
What is the Minimum balances for a money market account?
Definition
about $1000-2500
Term
What is the Minimum balances for a checking account?
Definition
about $500
Term
What is the FDIC?
Definition
-Federal Deposit Insurance Corporation
-an independent agency of the federal government that regulates banks
Term
What is the penalty for early withdrawal on a CD?
Definition
a huge fine
Term
What is monetary policy?
Definition
The regulation of the money supply and interest rates by a central bank
Term
What are the advantages of a checking account?
Definition
-convenience
-record of finances
-proof of payment
-safety
Term
What are the disadvantages of a checking account?
Definition
-Buying checks
-It takes time
-Overage fees
-Unorganized
-Maintaining a balance
Term
What are the 2 types of checking accounts?
Definition
-regular
-interest
Term
When should you get a regular checking account account?
Definition
-If you write a large number if checks each month
Term
Who can service fees be waived for?
Definition
students and senior citizens
Term
What is a service fee?
Definition
-A fee that a bank may charge for handling a checking account
Term
Describe a Interest Checking Account.
Definition
-Usually require a minimum monthly balance of $500 or more
-If the balance falls below there will be no interest paid and there will be a service charge
-May have a monthly charge
-Fee for each check written
Term
Opening a Checking Account
Definition
-Take paycheck or cash to the bank
-Open a new account and pick out checks
-May offer a check card
Term
Signature Card
Definition
A card that must be signed by an individual who is opening an account
Term
Describe a Interest Checking Account.
Definition
-Account can earn interest, typically 2%-4%, depending on the economic conditions
-The interest rate may be tied to the current money market rate
-The interest rate that big users of money, such as the government and large corporations, pay when they borrow money.
-Varies day by day
-The bank determines the average rate for the month
Term
How can you check your account information?€
Definition
Online, telephone, bank
Term
What does ATM stand for?
Definition
Automated Teller Machine
Term
What does ATM stand for?
Definition
Automated Teller Machine
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