Loans and Bank Accounts Flashcards
What is a mortgage?
A legal agreement in which a bank lends money at a certain interest in exchange for taking ownership of the debtors property
What is interest?
The charge for the privilege of borrowing money, typically expressed as an annual percentage rate
What is principal?
The original sum of money borrowed in a loan or put into an investment
What is repayment?
The act of paying back money previously borrowed from a lender
What do larger regular repayments mean?
Loans will be paid off sooner
What are the main features of a transaction account?
You can use a debit card for EFTPOs, receive money from ATM’s with no withdrawal fees and you can use direct debit and internet banking
What are the disadvantages of a transaction account?
Little to no interest is produced
What are the advantages of a transaction account?
You can deposit and withdraw money many times without incurring penalties and you can put wage and salaries into the account
What are the main features of a saving account?
It allows you to earn more interest by setting aside money separately and offers bonus interest if there are no withdrawals within a month
What are the disadvantages of a savings account?
You must deposit a certain amount of money every month and there are ATM fees for cash withdrawals
What are the advantages of a savings account?
You can earn higher interest than a transaction account
What are the main features of a term deposit account?
You can put excess money into accounts for a fixed period of time and the money is locked away for months or years
What are the disadvantages of a term deposit account?
You cannot access your money easily because of the withdrawal fees
What are the advantages of a term deposit account?
The longer the term and the greater amount of money deposited, the higher the amount of interest produced
