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15 Cards in this Set
- Front
- Back
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What are the major categories of financial services?
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savings
payment services (ex. checking accounts) borrowing other financial services (ex. trust) |
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What services are available through electronic banking systems?
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all major categories of financial services
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When interest rates are rising, you should ...
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use long-term loans
select short-term savings instruments |
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When interest rates are falling, you should ..
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use short-term loans
select long-term savings instruments |
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What factors do consumers usually consider when selecting a financial institution to meet their savings and checking needs?
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Where can I get the best return on my savings
How can I minimize the cost of checking and payment services? Will I be able to borrow money if I need it? |
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What are examples of deposit-type financial institutions?
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Commercial banks, savings and loan associations, mutual savings bank, credit unions
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What are the main types of savings plans offered by financial institutions?
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1.) regular savings accounts
2.) Certificates of Deposit (CD) 3.) money market accounts and funds 4.) US Savings Bonds |
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What are the benefits and drawbacks to a regular savings account?
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benefits: low min balance, ease of withdrawal, insured
drawbacks: low rate of return |
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What are the benefits and drawbacks to money market account/fund?
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benefits:
favorable rate of return, allows limited # of checks drawbacks: higher min balance than reg. savings acct, service charge and/or lower rate if below certain balance, not insured |
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What are the benefits and drawbacks to Certificates of Deposit?
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benefits: guaranteed rate of return for time of CD, insured
drawbacks: possible penalty for early withdrawal, minimum deposit |
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What are the benefits and drawbacks to US savings bonds?
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benefits: rate varies with interest rates, low minimum deposit, government guaranteed, exempt from state, local income taxes
drawbacks: lower rate when redeemed within first five years |
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How does a money market account differ from a money market fund?
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major difference is safety - "accounts" are covered by federal deposit insurance and "funds" are not
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How do inflation and taxes affect earnings on savings
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they reduce interest earned on savings
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What is an asset management account?
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provides a complete financial services program for a single fee and includes: credit card, ATM card, online banking, line of credit, investment options
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How to calculate Tax Rate of Return
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(1- tax rate)* yield on savings
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