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47 terms

Unit 4: Banking and Credit

vocabulary from unit four in personal finance
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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looks like a credit card but is connected to the cardholder's checking account for transactions; money is automatically withdrawn from the account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