Banking Basics
A bank account designed for everyday transactions, allowing easy deposits and withdrawals.
What is a checking account?
Money you earn from working or allowances.
What is income?
Items with economic value that you own, such as savings, investments, or real estate.
What are assets?
A plastic card that allows you to make purchases now, but pay for them later.
What is a credit card?
Money that the government collects to pay for public services like schools and roads.
What are taxes?
A bank account that earns interest over time, usually used for saving money.
What is a savings account?
An expense that stays the same every month, such as rent.
What is a fixed expense?
Debts or financial obligations you owe, such as loans, mortgages, or credit card debt.
What are liabilities?
Extra money paid for the privilege of borrowing money.
What is interest?
The total amount of money earned before any taxes or deductions are taken out.
What is gross pay?
This fee occurs when money is withdrawn from a checking account, but there are not sufficient funds to cover it.
What is an overdraft fee?
The total value of your assets minus your liabilities.
What is net worth?
Money you owe to another person or institution.
What is debt?
A 3-digit number (typically 300–850) that predicts your ability to repay debt, with 700+ generally considered good.
What is credit score?
A review of your tax return by the IRS to verify accuracy.
The automatic electronic transfer of a paycheck from an employer directly into a bank account.
What is direct deposit?
The process of setting aside money to use later.
What are savings?
The amount of money coming in (income) versus going out (expenses) over a period.
What is cash flow?
A detailed history of your credit accounts, loans, and payment history maintained by bureaus.
What is credit report?
A United States federal wage and tax statement that an employer must give to each employee and also send to the Social Security Administration (SSA) every year
What is a W-2 form?
The amount of money the FDIC insures savings accounts for in case a bank fails.
What is $250,000?
A popular budgeting rule that allocates 50% of income to needs, 30% to wants, and 20% to savings/debt repayment.
What is the 50/30/20 rule?
Interest earned on both the original principal amount and the accumulated interest from previous periods.
What is compound interest?
The maximum amount of money a lender allows you to spend on a credit card or line of credit.
What is credit limit?
An expense that can lower the amount of income you have to pay taxes on.
What is a tax deduction?