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Terms in this set (72)
banks that provide savings & checking accounts, mortgages, personal loans, debit cards, and credit cards to people and possibly businesses
owned and controlled by its members, offers same services as retail banks but you have to be a member; used by people who live or work in certain areas
similar to retail banks but no physical location near you, provides savings and checking accounts, and debit & credit cards
Payday Lenders & Check Cashing Services
payday lenders offer small cash loans, usually in the range of $100 to $500, with payment due in full at the borrower's next paycheck
the Federal Reserve is the central banking system of the United States, oversees nation's system of money and credit
What does FED do?
print money, control the amount of available money, adjust long term interest rates, keep prices stable, and promote employment
How is FED organized?
it is an independent institution with some government oversight, composed of a Board of Governors (in charge of monetary policy), the Federal Open Market Committee (FOMC, decides policies on money supply and interest rates), and 12 regional Federal Reserve Banks (collect data and research on banks and economy)
how much money is available to the economy
FOMC and what it does
a committee of the federal reserve board, decides nation's policies on money supplies and interest rates
FDIC stands for the Federal Deposit Insurance Corporation, which insures deposits at banks that have purchased the coverage; protects 250,000 per person per bank in each category, covers online and retail while credit unions have their own insurance managed by the National Credit Union Administration
refers to how easily and quickly your assets, like your money, can be moved
easy to access money like in a checking account
harder to access money like in a certificate of deposit
more liquid account means...
fee for using another bank's ATM
Bounced Check fee
if you write a check but don't have the money in your account, and the check clears before you have the money, bank will charge a fee
a fee for having less in your account than the minimum balance required by the bank
take out more money than you have
Required Balance fee
if amount of money in your account dips below a certain amount
Balance your checking account to
keep track of your transactions so you don't write a check for money than you have
Parts of a check
check number: identifies check amount: in numbers and words, account number: tells bank which account, routing number: which financial institution issued check, memo line: optional, what payment is about, signature
a detailed report of an individual's credit history prepared by a credit bureau and used by a lender in determining a loan applicant's creditworthiness
a number that show how likely someone is to pay off their debt, a three digit number
a high credit score
more likely to pay off debt
low credit score
less likely to pay off debt
benefits of a high credit score
better loan terms, lower interest rates, more likely to get a loan
likely won't pay off debt
likely will pay off debt
range of scores
300s - 850s
three credit score generators
Experian, Transunion, Equifax
ranges of scores
very poor (500 and lower), poor (500-579), fair (580-619), okay ( 620- 679), good (680- 700), and excellent (700+)
calculation of credit score
payment history (35%), amount owed (30%), length of credit history (15%), new credit (10%), and types used (10%)
frequency credit score should be checked
at least once a year
frequency credit score can be checked for free
three times a year
check credit score for...
credit history and accuracy
types of information on credit report
personal information, public records, potentially negativities, payment histories, soft inquiry, hard inquiry, and court judgments and bankruptcies
accepted by everyone
less common, pay rent bills, birthday presents
is a check guaranteed by a bank, drawn on the bank's own funds and signed by a cashier, will not bounce, extra money required for making a deposit
buy individual ones at a bank or other places, you pay up front and then use the money order to pay for goods or service.
merchant credit card
sign up for them at stores to get discounts, must pay it back, have high interest rates.
change credit cards
work like credit cards but the balance must be paid, in full, every month.
prepaid credit cards
allow you to put a specific amount of money onto them, usually have additional fees and charges, like when you want to use the card.
pro of using a credit card
if you don't have the money at the moment, you can still buy it.
Transferring money from your account to pay for things. You can have money withdraws from your account to pay for things like bills.
Transferring money directly from your paycheck into your account. Takes away the hassle of depositing or cashing your check.
what is the difference between a cash advance and a payday loan and what do we all need to watch out for with each of these?
Cash advances are loans from your credit card, have no grace period, higher interest rate, payday loans are meant to get you by until your next payday, but you can not pay these back as you would a credit card loan, come with extremely high fees, can charge 900% interest rates. Watch out for fees and interest rates.
"annual percentage rate" is the interest rate charged by your credit card on any balance not paid off before the next billing cycle.
some cards charge you special fees such as an annual membership fee.
some cards offer rewards like airline miles discounts or cash back to get people to sign up or use a particular credit card.
finance charges and late fees
making a late payment and transferring a balance to another card can result in extra fees.
the amount of money you charge to your credit card.
you might save money by transferring a balance to a card with a lower interest rate but you may have a fee.
Describe the different parts of a credit card statement
balance due, total credit balance, remaining balance, APR fees, late fees.
Describe strategies to avoid, manage and reduce existing credit card debt.
1) stop increasing your debt 2) pay at least the minimum or more each month and on time 3) ask credit card company to lower your interest rate, ask for debt counseling ( non-profit organization that you can trust) 4) use cards responsibly 5) do not spend more than you can afford
return on investment
grants and scholarships
a sum of money given by an organization or the government, for a particular purpose
What is Federal Work Study and how do you apply for it?
federally funded program in the United States that assists students with the costs of post-secondary education; the Federal Work Study Program helps students earn financial funding through a part-time work program
Federal Student Loans
a loan from the government, rates are lower and repayment is more flexible, students should use federal student loans to the extent they are available, and consider private loans only when federal aid isn't enough to pay for education
a loan from a bank, rates are higher and stricter repayment, consider after Federal Student Loans
subsidized FAFSA loan
pay back after you finish school, 6 month grace period
unsubsidized FAFSA loan
pay back as it accumulates while you are in school
free application for federal student aid is a form filled out by college or graduate students who are eligible for government-sponsored financial aid
(of money) denoting an original sum invested or lent
the cost for borrowing money
the proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding
paying extra for the convenience of borrowing money, interest on what you deposit
interest on what you deposited AND on you interest, can compound monthly, weekly, etc.
Savings Account/Simple Savings Account
the most basic savings vehicle, it compounds your interest, and it might have a minimum balance requirement
Money Market Account
part checking account part savings account, these will usually have a higher minimum balance requirement, but have higher interest rates as well
Certificate of Deposit (CD)
holds your money for a specific amount of time and has high interest rates, but you will be penalized if you withdraw the money early
Rule of 72
This rule tells you how long it will take for your money to double at a given interest rate, it is just an estimation. First, you identify your interest rate. Then, you divide 72 by that rate (72/R). The answer is how many years it will take for your money to double
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