Banking
What is a deposit?
This is the name of the money you put into a bank account.
What is a superannuation?
This is money saved during your working life for retirement.
What is a budget?
This is a plan for how you will spend and save your money.
What is a debit card?
This card uses your own money directly from your bank account.
What is HECS-HELP (or HELP loan)?
In Australia, this is the main government loan scheme for university students.
What is interest?
A fee paid on borrowed money or money earned on deposits with a bank or other financial institution.
What is the SGC? (definition and rate)
In Australia, employers must contribute 12% of your wage into super.
What are fixed expenses?
These expenses stay the same each month, like rent or a phone plan.
What is a credit card?
This card allows you to borrow money up to a set limit.
What is the repayment income threshold?
You only start repaying your student loan when your income reaches this.
What is the name of Australia's bank?
Reserve Bank of Australia
What is a super fund?
This is the fund that manages and invests your super contributions.
What are variable expenses?
This type of expense can change from week to week, like takeaway or entertainment.
When is interest charged?
If you don’t pay your credit card balance in full, then interest is charged.
Student loans do not incur interest charges; but instead they are...
Unlike many personal loans, student loans in Australia are indexed to adjust for inflation.
What is a savings account?
This type of account usually earns interest and is designed for long-term saving.
What is a growth option?
This investment option usually has higher risk but higher potential returns over time.
What is a surplus?
When your income is higher than your expenses, this occurs.
What is a credit limit?
This is the maximum amount you are allowed to borrow on a credit card.
What is indexation?
This happens to your student loan each year even if you haven’t started repaying it, causing the amount you owe to increase with inflation.
How do banks make profit? (two things)
By lending money at higher interest rates than they pay on savings (interest margin), and through fees.
What is earning interest on interest over time?
This is the benefit of compound interest over a long working life.
What is the 50/30/20 rule?
This budgeting rule suggests 50% needs, 30% wants, and 20% savings.
What is a credit score?
This number represents how trustworthy you are to lenders.
Why might a HECS-HELP loan be considered less risky than a bank loan, even though the amount you owe can increase over time?
Because repayments only occur once you earn above the income threshold, and they are income-contingent (not fixed repayments like a normal loan).