Questions and Answers
What are savings and checking accounts at a credit union usually called?
share accounts
What type of company is organized primarily to lend money for home mortgages?
savings and loan associations
A typical down payment for a house is about how much percent of the purchase price?
10 to 20 percent
What do government subsidized student loans usually not require until after graduation?
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Where do work-study programs allow students to earn money?
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What is interest paid on the original principal plus accumulated interest called?
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What type of bank provides the widest variety of banking services?
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Savings accounts protected by the FDIC are covered for up to how much?
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What is a plan that allows you to authorize your employer to make automatic deductions from your paycheck?
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Credit unions are owned by the board of directors of the banks that established them.
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Bonds represent debt, or a loan; stocks represent equity, or ownership.
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The best reason to save money is to provide for future needs.
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When you buy a house, the smaller your down payment, the smaller your monthly mortgage payments will be.
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Scholarships always come with no strings attached.
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Earnings on principal is called interest.
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The more often interest is compounded, the greater your interest earnings will be.
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Online savings accounts generally pay higher rates of interest than traditional savings accounts.
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With a certificate of deposit, there is a substantial penalty for taking your money out before the maturity date.
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The more liquid an investment, the less earning potential it is likely to have.
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People often choose their financial institution because of convenience of locations or services offered.
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One disadvantage of using direct deposit is that your paycheck can only be deposited into a savings account, not a checking account.
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To compare accounts with different compounding methods, the law requires that all financial institutions tell the consumer the APY (annual percentage yield).
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Compound interest refers to interest earned on principal plus interest.
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Work-study programs replace a student's need for any other source of money for college funding.
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With a subsidized student loan, interest begins accruing the day you receive the loan.
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What is a down payment?
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What are scholarships?
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What is loan consolidation?
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What are grants?
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What is principal?
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What are credit unions?
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What is a brokerage firm?
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What is liquidity?
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What is a maturity date?
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What is safety of principal?
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Study Notes
Savings Accounts and Banking
- Savings and checking accounts in credit unions are known as share accounts.
- Savings and loan associations are specifically organized to lend money primarily for home mortgages.
- A typical down payment for purchasing a house ranges from 10% to 20% of the purchase price.
- Commercial banks provide the widest variety of banking services available.
- Accounts protected by the FDIC are insured for up to $250,000 against loss.
Student Loans and Programs
- Government-subsidized student loans do not require payments until after graduation.
- Work-study programs allow students to earn money by working on campus.
- Scholarships are cash allowances awarded to students to help cover education costs.
- Grants are funds for education that do not require repayment and do not generally have academic performance requirements.
Interest and Savings
- Compound interest refers to interest calculated on both the initial principal and the interest that has been added previously.
- Earnings on principal money in a savings account generate interest.
- Online savings accounts typically offer higher interest rates compared to traditional savings accounts due to lower operational costs.
- The more frequently interest is compounded, the higher the overall interest earnings.
Investment and Financial Terms
- Liquidity measures how easily one can access cash without losing value.
- The principal is the initial amount of money deposited into a savings account.
- Brokerage firms are companies that facilitate the buying and selling of stocks and bonds.
- The maturity date of an investment marks when it becomes due for payment.
Financial Practices
- Direct deposit allows paychecks to be transferred automatically into various types of accounts, including checking accounts.
- Loan consolidation merges multiple loans into one, simplifying repayment into a single monthly payment.
- The safety of principal ensures that savings deposits are protected, meaning no loss occurs even if the financial institution fails.
- Choosing a financial institution often depends on the convenience of locations and the services offered.
True or False Concepts
- Credit unions are not owned by a board of directors from banks; they are member-owned, non-profit organizations.
- Bonds represent debt, while stocks signify ownership of a company.
- A smaller down payment on a house typically leads to larger monthly mortgage payments.
- Compound interest results in greater earnings when it is compounded more frequently.
- The law mandates all financial institutions provide consumers with the annual percentage yield (APY) for account comparison.
- Work-study programs do not entirely eliminate the need for other financial sources for college funding, nor do subsidized loans accrue interest immediately upon receipt.
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Description
Test your knowledge about savings and checking accounts with these flashcards from Chapter 10 of Personal Finance. Learn key terms and concepts related to saving money, mortgages, and down payments. Perfect for anyone looking to strengthen their financial literacy.
