Deposit-Type Financial Institutions
Commercial Banks, Savings and Loan Associations, Savings Banks, Credit Unions
Nondeposit-Type Financial Institutions
Mutual Funds, Stockbrokerage Firms
Advantages to Online Banking
Personal financial management support, convenience, efficiency, effectiveness
Disadvantages of Online Banking
Start-up time, adapting to online banking, feeling comfortable, costumer service
Money Market Deposit Account (MMDA)
A bank account that provides a rate of interest that varies with the current market rate of interest
Certificates of Deposits (CDs)
Savings alternatives that pay a fixed rate of interest while keeping your funds on deposit for a set period of time that can range from 30 days to several years
Money Market Mutual Funds (MMMFs)
Mutual Funds that invest in short-term (generally with a maturity of less than 90 days) notes of very high denomination
Asset Management Accounts
Comprehensive financial services packages offered by a brokerage firm
U.S. Treasurey Bills
Short-term notes of debt issued by the federal government, with maturities ranging from 3 months to 12 months
Denomination
The face value or amount thats returned to the bondholder at maturity. Its also referred to as the bond's par value
U.S. Savings Bond
A type of security that's actually a loan on which you receive interest, generally every six months for the life of the bond. When the bond matures, or comes due, you get back your investment, or "loan". What you get back at maturity is usually the face v
Annual Percentage Yield (APY)
The simple annual percentage yield that converts interest rates compounded for different periods into comparable annual rates. Allows you to easily compare interest rates.
Federal Deposit Insurance Corporation (FDIC)
The federal agency that insures accounts at credit unions
National Credit Union Association
The federal agency that insures accounts at credit unions.
Overdraft Protection
Provision of an automatic loan to your checking account whenever sufficient funds are not available to cover checks that have been written against the account.
Grace Period
The length of time given to make a payment before interest is charged against the outstanding balance on a credit card
Credit Card Fees
Annual, Merchant's Discount, Cash Advance, Late, Over-the-limit
Different kinds of Credit Cards
Bank, Premium or Prestige Credit Card, Affinity, Travel and Entertainment, Single-Purpose
The Five C's of Credit
Character, Capital, Collateral, Capacity and Conditions
FICO
Fair Isaac Corporation
Whats a good credit score?
The national median is 723, but the cutoff to get the best rate generally requires a score of 760 or higher, with a score of 620 often times serving as a cutoff point for recieving credit from many lenders.
Whats in a credit report?
Identifying Information, Trade Lines or Credit Accounts, Inquires, Public Record and Collection Items
The Factors that determine you credit score
Your payment history (35%), The amount you owe and your available credit (30%), Length of credit history (15%), Types of Credit Used (10%), New Credit (10%)
Three major Credit Bureaus
Experian, Equifax, and TransUnion
Debt Percentage Rules
Mortgage Debt cannot exceed 28% of income, while total debt cannot exceed 36% of income
Single-Payment or Balloon Loan
A loan that is paid back in a single lump-sum payment at maturity, or the due date of the loan, which is usually specified in the loan contract. At the date you pay back the amount you borrowed plus all interest charges
Bridge or Interim Loan
A short-term loan that provides funding until a longer-term source can be secured or until additional financing is found
Installment Loan
A loan that calls for repayment of both the interest and the principal at regular intervals, with the payment levels set in such a way that the loan expires at a preset date
Loan Amortization
The repayment of a loan using equal monthly payments that cover a portion of the principal and the interest on the declining balance. The amount of the monthly payment going toward interest payment starts off large and steadily declines, while the amount
Fixed Interest Rate Loan
A loan with an interest rate that stays fixed for the entire duration of the loan
Variable or Adjustable Interest Rate Loan
A loan in which the interest rate does not stay fixed but varies based on the market interest rate
Prime Rate
The interest rate banks charge to their most creditworthy, or "prime", costumers
Convertible Loan
A variable-rate loan that can be converted into a fixed rate loan at the borrower's option at specified dates in the future.
Security Agreement
An agreement that identifies whether the lender or borrower retains control over the item being purchased
Default
The failure of a borrower to make a scheduled interest or principal payment
Note
The formal document that outlines the legal obligations of both the lender and the borrower
Student Loan
A loan with low, federally subsidized interest rates given to students based on financial needs
Ways to get a lower interest rate
Secured, higher credit score, lower maturity, money down
Earnest Payment
A deposit on the home purchase to assure the seller that the buyer is serious about buying the house
Tips when buying a car
Get the service records, one owner and know the owner