Vocab Banking And Checking Consumr Ec. 1-26-12

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ATM

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acronym for Automated Teller Machine. allows customers to conduct certain transactions around the nation and the world, usually subject to a surcharge fee.

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Annual Percent Yield

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The actual percentage rate that an account pays per year.

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Bank

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An institution that acts as a financial intermediary by receiving money from depositors and lenders and also lending to borrowers. A bank must be chartered and meet certain criteria. Chartering is done by the Comptroller of the Currency for national banks, by the Federal Reserve System for state member banks, by the Federal Deposit Insurance Corporation (FDIC) for insured banks, and by state regulatory agencies. Also referred to as a commercial bank.

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Chapter 11

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reorganization bankruptcy, usually involving a corporation or partnership. (A Chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time

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Chapter 7

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The chapter of the Bankruptcy Code providing for liquidation -- the sale of a debtor's nonexempt property and the distribution of the proceeds to creditors.

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Compound Interest

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Interest that is determined by adding the interest earned in the current period to the principal and computing the next period's interest on this "compounded" total amount.

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Credit Cards

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A plastic card with a coded magnetic stripe that, when signed, entitles its bearer to a revolving line of credit, with a credit limit and interest rate determined by the borrower's income and credit report. The first real credit card was issued in 1951 by Franklin National Bank in New York.

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Credit Union

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A nonprofit, cooperative financial institution owned and controlled by the people who use its services, usually a group such as employees in the same company or industry. Credit unions historically have been able to offer lower rates and fees and still operate in the black. Credit unions rely on a financial reserve to absorb unexpected losses from loan defaults or other financial setbacks, and the majority of credit unions carry federal deposit insurance that protects individual accounts up to a specified amount in the event the credit union fails.

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Creditor

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one who is owed money

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Debit Card

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A payment card that is linked directly to a customer's bank account. A PIN-based or direct debit card removes a purchase price from a customer's checking account almost immediately. A signature-based or deferred debit card has a Visa or MasterCard logo and removes the purchase price from a customer's bank account in two or three days.

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Direct Deposit

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An automatic deposit of wages or benefits to a customer's bank account.

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Dividends

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Distribution of earnings to shareholders. it's the money paid to members for deposits, similar to the interest banks pay to their customers for deposits.

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Electronic Funds Transfer (EFT)

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The transfer of money between accounts by consumer electronic systems such as automated teller machines (ATMs), and electronic payment of bills.

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Express Account

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A low-fee or no-free checking account, limited to ATM, telephone and personal computer transactions

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Fixed Rate

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the annual percentage rate (APR) the interest rate is fixed and not subject to adjustment

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Fair Debt Collection Practices Act

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A federal law that prohibits certain methods of debt collection, such as harassment.

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FDIC

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Federal Deposit Insurance Corp. - An agency of the U.S. government that manages the bank insurance funds, which insure deposits at banks and other qualifying financial institutions up to $100,000 per account ($250,000 on retirement accounts) in interest and principal. FDIC insurance is mandatory for all nationally chartered banks and all banks that are members of the Federal Reserve System.

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Federal Reserve

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- Congress founded the Federal Reserve, the central bank of the United States, in 1913. It conducts the nation's monetary policy and regulates its banks in order to achieve a flexible and stable economy

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Float

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The amount of time the bank takes to clear -- or reject (bounce) -- a check for payment; the time at which funds are debited from the issuer’s account.

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Interest

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Money paid for a borrower’s use of money, calculated as a percentage of the money borrowed and paid over a specified time.

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Joint Account

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A bank account owned by two or more persons who share equally in the rights and liabilities of the account.

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Lifeline Account

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A no-frills account for low-income customers, which is mandated by law in some states. These accounts are typically checking and savings products that have little or no monthly fees, require little if any minimum deposit and balance, and allot a set number of checks each month.

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Liquidity

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The ability to convert assets to cash quickly, without significant losses.

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Money Market Account

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a high-yield savings account, FDIC insured, that allows consumers to put their money into accounts that have higher yields than passbook or statement savings accounts.

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Net Worth

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The total value of all assets, such as house, car, furniture and investments, minus all debts, such as mortgages and credit card bills.

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Overdraft

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The amount that a check exceeds the available balance in the payer's account

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Personal Identification Number (PIN)

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A confidential personal identification code, usually consisting of four to six digits, used by bank customers to access their account balances when using a self-service automated teller machine (ATM).

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Prime Rate

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A common benchmark for consumer and business loans set by banks, usually at a level 3 percentage points higher than the Fed Funds rate.

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Power of Attorney

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A document in which the signer authorizes someone to conduct business in his or her name -- signing title documents and checks, for example.

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Recession

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A prolonged period (popularly defined as two successive quarters) in which economic activity shrinks.

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Savings Account

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- Liquid account that generally offers low or no minimum balance requirements, often carries a monthly service charge and generally pays a low rate of interest. The account usually has no restrictions on the number of transactions.

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Savings and Loan Association

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A state or federally-chartered depository financial institution that was primarily a provider of home mortgages but since deregulation in the 1980s to offer services similar to a commercial bank.

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Service Charge

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Fees charged to customers for specific services or as a penalty for not meeting certain requirements such as insufficient funds in a checking account.

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Simple Interest

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Interest computed only on the principal balance, without compounding.