Test 3 Flashcards
issue of money, goods or services to an individual or entity with the expectation of future payments
credit
trusted institutions where money is kept secure
bank
process of borrowing money from an individual or investor without a bank’s consent
peer-to-peer lending
amount of money charged by a bank to borrow money
interest
short-term, high cost loan typically for $500 or less and due on the next payday
or when income is received
payday loan
valuable asset the borrower offers to lender for securement of the loan provided
collateral
maximum amount being loaned to the borrower by the creditor
revolving credit
determines a series of fixed or installment payments a borrower must repay over a determined period of time
installment credit
right to keep possession of property of another until a debt owed by the person is discharged
lien
loan which is issued and supported by a borrower’s reliability, rather than value of an asset
unsecured credit
provides a line of credit from a lending institution which can be accessed with a card, has a maximum limit (credit limit) which can be spent and requires monthly repayments
credit card
draws money directly from the consumer’s checking account when a purchase
is made
debit card
document or spreadsheet outlining an individual’s financial position at a given
point of time
income statement
report which provides a list of assets and debts owed
net worth statement
number given to an individual which indicates to the lender their ability to repay a loan
credit score
shows how an individual has used credit in the past, how much debt they currently have and whether or not they pay their bills on time
credit report
annual or yearly rate charged for borrowing or earned through an investment
annual percentage rate
interest rate which stays the same throughout the loan
fixed interest
interest rate which fluctuates overtime as market rates change
variable interest
process which involves paying off a debt with a fixed payment plan over a specific period of time
loan amortization
money which is agreed to be paid back and only goes towards the principal of the loan
principal payment
companies engaged in the business of dealing with the monetary transactions
of individual and commercial clients
financial institutions
secure means of storing money in which individuals or business can deposit or
withdraw money as needed
checking account
secure means of storing money while earning interest
savings account
fee paid regularly at a set rate
interest
money borrowed for personal reasons; to be repaid within a specific time frame
and with added interest
personal loan
money borrowed for the purchase of real estate; to be repaid within a specific
time frame and with added interest
mortgage loan
money borrowed for business reasons; to be repaid within a specific time frame
and with added interest
business loan
money borrowed for the purchase of a vehicle; to be repaid within a specific
time frame and with added interest
auto loan
form of payment in which customers draw money directly from their checking
account
debit card
form of payment in which customers borrow money from a financial institution
up to a certain limit, with added interest
credit card
allows an individual to borrow against their home’s value to finance major
expenses; to be repaid within a specific time frame and with added interest
home equity loan
allows banks to manage and protect an account on behalf of a beneficiary
trust account
individual who holds legal control of the assets in a trust account
beneficiary
electronic movement of money from one account to another
electronic funds transfer
allows individuals to have their paycheck or other payments deposited directly
into their account
direct deposits
electronic banking terminal which allows customers to complete basic
transactions, such as deposits or withdrawals
automated teller machine
electronic banking systems allowing customers to conduct financial
transactions via the Internet
online banking
line of credit issued to customers to cover checks or debits exceeding the
amount in their account
overdraft protection
form on online payment where money is electronically withdrawn from the
customer’s account
electronic checks
allows customers to pay bills or transfer money between accounts over the
phone
pay-by-phone system
organizations which accept deposits and provide loans
depository financial institutions
receive, transfer and lend money to individuals, businesses and government
commercial banks
provide financial services, such as checking and savings accounts, mortgages,
credit cards and auto loans for individuals, families and small businesses
retail banks
offer financial services such as checking and savings accounts, debit and
credit cards, mortgage and auto loans and lines of credit at an affordable rate
for its members
credit unions
handle deposit accounts, personal loans and mortgage lending
savings and loan associations
do not offer federally insured deposit accounts
non-depository financial institutions
private organizations which hold and manage securities for investment
purposes
Investment Banks & Companies
financial instruments with ownership rights, debt rights, or rights to buy, sell or
trade, such as stocks and bonds
securities
assist individuals in buying and selling securities among investors
brokerage firms
provide financial coverage to protect individuals or organizations against
possible adverse events in exchange for premium payments
insurance companies
amount paid for an insurance policy
premium
provides loans for prospective home buyers
mortgage company
requiring more than one method of credential authentication to verify a user’s
identity
multifactor authentication
continued actions of a business
business continuity
wrongful or criminal deception used for financial gain
fraud
sending forged e-mails impersonating an online bank
phishing
