Banking & Liquid Assets (Chapter 5)
This federal agency insures deposits in commercial banks up to $250,000 per depositor.
What is a Credit Union?
This 3-digit number, ranging from 300 to 850, is used by lenders to determine your creditworthiness
What is a Credit Score (or FICO Score)?
The cost of credit expressed as a yearly percentage rate.
What is APR (Annual Percentage Rate)?
These types of expenses stay the same every month, such as rent or a car payment.
What are Fixed Expenses?
The "plastic" card that takes money directly out of your checking account immediately.
What is a Debit Card?
This type of financial institution is member-owned and often offers lower fees and better interest rates than commercial banks.
What is a Credit Union?
This is the most important factor in calculating your credit score, making up roughly 35% of the total.
What is Payment History?
The period of time (usually 20–30 days) during which you can pay your credit card bill in full without being charged interest.
What is the Grace Period?
These expenses change from month to month, like groceries or entertainment.
What are Variable (or Flexible) Expenses?
Interest calculated on both the principal and the previously earned interest.
What is Compound Interest?
This specific type of account pays higher interest than a regular savings account but usually requires a higher minimum balance.
What is a Money Market Account?
The three major national credit reporting agencies that collect your financial data.
Who are Equifax, Experian, and TransUnion?
A fee charged if you use your credit card to get cash from an ATM.
What is a Cash Advance Fee?
A "pay-yourself-first" fund used to cover unexpected costs like medical bills or car repairs.
What is an Emergency Fund?
A legal process to get out of debt when you can no longer pay your creditors, which stays on your credit report for 7–10 years.
What is Bankruptcy?
A savings instrument where you "lock in" your money for a specific period (e.g., 6 months or 2 years) in exchange for a higher interest rate.
What is a Certificate of Deposit (CD)?
Credit that is backed by collateral, such as a car or a home, which the lender can seize if you don't pay.
What is Secured Credit?
This term refers to the maximum amount of money a credit card company allows you to borrow at once.
What is a Credit Limit?
When a bank allows you to spend more money than you have in your account, often charging a hefty fee.
What is an Overdraft?
A person who signs a loan with you and agrees to pay it back if you fail to do so.
What is a Co-signer?
What is Reconciling (or Bank Reconciliation)?
This federal law allows you to receive one free credit report from each of the three bureaus every 12 months.
The dangerous practice of only paying the smallest amount allowed on a credit card, which can lead to years of debt.
What is making the Minimum Payment?
The ratio of your total credit card balances to your total credit limits, which should stay below 30%.
The "Time Value of Money" principle states that a dollar today is worth this compared to a dollar in the future.
What is More?