Unit 4: Banking and Credit

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vocabulary from unit four in personal finance

PIN

a number you choose and use to gain access to various accounts; a personal identification number

reconcile

balance the checkbook register each month to the balance shown on the statement

overdraft protection

an automatic loan made to you if you write a check for more money than you have in your account

outstanding transaction

items which have not cleared and are listed on the statement

ATM

Automated teller machine; an unattended machine (outside some banks) that dispenses money when a personal coded card is used

register

a written record of transactions

payee

who you are writing the check to

debit card

looks like a credit card but is connected to the cardholder's checking account for transactions; money is automatically withdrawn from the account

float time

period of time where a transaction is being processed but not charged

endorsement

signature of recieving person on the back of a check approving it for deposit

deposit

putting money into an account

check 21

paper checks are scanned into a computer system at the place of business and immediately returned to the customer

bounces

when a check is written for an amount over the current balance held in the account

signature card

a card with your name, address, and authorized signature of a bank customer

electronic banking

a service provided by financial institutions that allows customers to manage their transactions through computerized network services

Federal Reserve Bank

group of 12 regional banks that provide financial services, contribute to monetary policy, and supervise commercial banks in their regions

credit

when goods, services, and/or money are recieved in exchange for a promise to pay back a definite sum of money at a future time

lender

person or organization with resources to provide a loan

borrower

wants to aquire an item but does not have the money to pay for it

interest

the amount you pay to use someone else's money

principal

the actual amount borrowed

APR

annual percentage rate; the interest rate charged to the cardholder on the amount borrowed in terms of dollars per year

Collateral

an asset of value that lenders can take from you if you don't repay the loan as promised (4 C's of credit)

Capital

lenders want to know if you have any items that they can sell to repay the loan in the event that you don't pay your bills (4 C's of credit)

Capacity

lenders want to know if you are able to repay a loan based on income and employment history (4 C's of credit)

Character

lenders want to know if you are trustworthy (4 C's of credit)

Universal default

a clause included in many agreements that allows a credit card company to increase your interest rate if you make just one late payment

credit score

a rating used by credit reporting companies to help lenders decide whether and/or how much credit can be extended to a borrower

Credit report

a detailed record of your personal credit and financial transactions

closed-end credit

involves one transaction, such as a home loan

installments

The regular periodic payment that a borrower agrees to make to repay a lender

open-end credit

a line of credit used repeatedly (credit card)

annual fee

a fee charged once a year for credit card ownership

finance charges

the charges assessed to the account for the credit card use throughout the month

grace period

amount of time allowed to the cardholder between the day the items are charged on the credit card and the day finance charges begin to apply

credit line/limit

the maximum amount of charges allowed to the account

Equifax, TransUnion, Experian

the three credit reporting agencies

blank endorsement

reciever of the check signs his/her signature; anyone can deposit or cash the check after it is signed

restrictive endorsement

more secure; reciever writes "for deposit only" above his/her signature; allows checks to only be deposited

special endorsement

reciever signs and writes "pay to the order of (fill in the person's name)"; allows the check to be transferred to a second party

Chapter 7

type of bankruptcy: most of your debt is erased, is for unemployed and people with low income, and these people must take financial counseling

Chapter 13

type of bankruptcy: you must repay many of your debts over time (5 years) and the court oversees these payments

credit card

pre-approved credit which can be used for the purchase of items now and payment of them later

schumer box

The federal truth in lending act requires institutions to list the costs of credit cards in this in order for customers to avoid unexpected finance charges. It is helpful for consumers in comparing credit card offers and it tells all the little details.

late payment fees

a fee charged when a cardholder does not make the min. monthly payment by the due date

checking account

tool used to transfer funds deposited into the account to make a cash purchase

checkbook

contains the checks and the register to track monetary transactions

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