Exam 2 Flashcards
4-7
Types of financial institutions
Deposit and non-deposit institutions
Deposit instutions
serves as intermediaries between suppliers and users of funds (commercial banks, s&ls, mutual savings bank, credit unions)
non-deposit institutions
offer various financial services that are nonbank
Commercial banks
a financial institution that offers a full range of financial services to individuals, businesses, and government agencies
Savings and loan association
a financial institution that traditionally specialized in savings account and mortgage loans
Mutual savings bank
a financial institution that is owned by depositors and specializes in savings accounts and mortgage loans
credit unions
a user-owned, nonprofit, cooperative financial institution that is organized for the benefit of its members
money market fund
a savings– investment plan offered by investment companies, with earnings based on investments in various short-term financial instruments
debit card
a plastic access card used in computerized banking transactions; also called a cash card
What is the purpose of a credit card?
delay payments, build credit history, major purchasing, earn rewards
What is the purpose of a debit card?
limit spending, avoid bills, avoid interest
stored value cards
prepaid debit cards for telephone service, transit fares, highway tolls, laundry service, and school lunches
Types of payments
Digital, checking etc
What is the cost of a lost debit card?
Fee’s can vary from $50 - all the money in your account or more
FDIC insurance
prevents a loss of money due to the failure of the insured institution
credit
an arrangement to receive cash, goods, or services now and pay for them in the future
finance charge
the total dollar amount paid to use credit
interest
a periodic charge for the use of credit
How much net income should be spent on credit
15% or less
The 5 Cs of credit
Character, capacity, capital, collateral, & conditions
credit bureau
an agency that collects information on how promptly people and business pay their bills
appraisal
an estimate of the current value of a propety
renting pros and cons
pro: easy to move, fewer responsibilities, minimal financial commitment. cons: no tax benefits, limitations on remodeling, restrictions such as no pets
buying pros and cons
ownership, financial benefits, lifestyle flexibility. cons: financial commitment, higher living expenses, limited mobility
types of housing
single-family dwellings, multi unit dwellings, condos, cooperative housing, factory built houses, & building your own
PMI (private mortgage insurance)
usually required if the down payment is less than 20 percent
types of mortgages
Conventional 30-year mortgage, conventional 15-20 year mortgage, FHA/VA fixed rate mortgage, adjustable rate mortgage
