Unit 4 Flashcards
A type of financial institution that has LOANS as the primary financial assets is a _________.
Bank
What is a financial institution?
Any institution (public or private) that collects funds and invests them in financial assets
A type of financial institution that is a FOR PROFIT organization is a ______.
Bank
A type of financial institution that is owned by INVESTORS but can be either STATE or FEDERAL is a _________.
Bank
A type of financial institution that has members with a COMMON THEME and focuses more on MEMBERS’ SERVICES is a __________.
Credit Union
A type of NON-PROFIT financial institution that has a focus on CONSUMER (individual) LOANS is a __________.
Credit Union
A type of financial institution that was originally ONLY REAL ESTATE is a __________.
Savings & Loans
Only ____% now can be car/commercial loans in Savings & Loans.
20%
A type of financial institution that has federal insurance for bank deposit accounts is __________.
FDIC
Federal Deposit Insurance Corporation
FDIC insures up to $________ at each bank.
$250,000
Financial institutions insure/COVER:
Deposit accounts
Checking, certificate of deposit, saving, money market, etc
Financial institutions do NOT insure/COVER:
Any type of investment
Any type of money market FUND
Theft
Anything in safety deposit box
A type of financial institution that has federal insurance for credit unions is __________.
NCUA
National Credit Union Administration
A PASSBOOK is also known as a __________ and is a:
Savings account
Booklet with transactions
What is a DEPOSIT SLIP?
Paper filled out to put money INTO account
What is STOP PAYMENT?
When you DON’T want to honor a check
What is a BANK STATEMENT?
A monthly form with records for the activity in your deposit account
What is a CANCELLED CHECK vs an OUTSTANDING CHECK?
Cancelled: A check that HAS BEEN PAID by the bank
Outstanding: a check that has not yet gone through the bank as a transaction
What is KITING?
The process of TRANSFERRING MONEY to MORE THAN ONE BANK to make it look like you have more money than you really do
What is RECONCILIATION?
The process of making sure your records MATCH the bank’s
What is a SIGNATURE CARD?
A paper with a list of people authorized to SIGN CHECKS for your account
What is an NSF Check?
Insufficient funds to cover check
What is OVERDRAFT?
Taking more money out of your account than WHAT IS AVAILABLE
What is ELECTRONIC BANKING?
Online banking service offered (EFT)
What is a SAFE DEPOSIT BOX?
A box with valuable things locked inside
What is an INSTALLMENT LOAN?
(Typically monthly) set payment over a certain amount of time
(Ex. 3 yr payment over 36 installments)
What is a MORTGAGE LOAN?
Loan to buy real estate (typically longer)
Most common ex.s 15 yrs & 30 yrs
What is LINE OF CREDIT?
A revolving loan
What is ANNUAL PERCENTAGE RATE (APR)?
The percentage you are laying on the loan
What are SECURED LOANS vs UNSECURED LOANS?
Secured: lowest interest rate; if a property can be taken until it’s paid off
Unsecured: highest IR; can’t take property as result of loan (ex. credit card)
What is COLLATERAL?
Whatever thing(s) they can come take from you if a loan doesn’t get paid
What are FIXED RATES?
Where the interest rate stays the same for the entire life of the loan; prime lending rate & is reserved for best customers
What are ADJUSTABLE RATES?
(Mortgage)
ARM; will typically adjust with federal loan rates
What are BALLOONS?
Large payments due at the end of the loan
What is an AMORTIZATION SCHEDULE?
A schedule that shows your remaining balance by payment
What is a CHECK?
(Legal tender)
A form that transfers ownership of money
What are MONEY ORDERS?
Certified payments ( = guarantee)
What is a CASHIER’S CHECK?
A check written on the BANK’S FUNDS not your funds
What are two forms of EFTs?
ACH (Automated Clearing House): 3rd party service that handles the actual transaction
Wire Transfer: same as ^^^^ but happens through federal reserve bank itself
What is an ENDORSEMENT?
A transfer of ownership
What are the 3 types of endorsements we learned about?
Blank Endorsement: name only Special Endorsement: sign rights over to specifically someone else Restrictive Endorsement: restrict what can happen with the money
What do you do for a BLANK ENDORSEMENT?
Just write your signature on the back of the check
What do you do for a SPECIAL ENDORSEMENT?
Write your signature on the back of the check AFTER writing “Pay to Person’s Name”
What do you do for a RESTRICTIVE ENDORSEMENT?
Write your signature on the back of the check AFTER writing/specifying destination (ex. “For Deposit Only”)
