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Cards In This Set
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What is a commercial bank and what is its purpose?
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They offer a full range of financial services including checking, saving, lending, etc. They are often privately owned. Their purpose is to make money.
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What is a credit union and what is its purpose?
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A user-owned, nonprofit financial institution (i.e. Boeing employees credit union). Purpose: to make money for participants.
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What is the purpose of a life insurance company?
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To make money by providing insurance.
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What is an investment company?
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They invest in stocks, bonds, ETFs, mutual funds, etc. for the purpose of making money for themselves and clients.
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What do pawnshops do?
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Quickly make cash loans based on the value of tangible possessions.
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What are 4 things to think about when selecting a savings plan?
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The rate of return.
Inflation - cost of goods going up Taxes - changes by government Liquidity - how fast you can get cash without paying additional fees. |
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What should you do when interest rates are rising?
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Use long-term loans to take advantage of current low interest rates.
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What is a cashier's check?
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Guaranteed by the bank.
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What are 5 advantages to consumer credit?
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1. Allow people to travel without cash.
2. Allows big purchases "now" 3. May build good credit 4. Hotel reservations, car rentals, etc. 5. May earn "points" that lead to discounts |
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What are 3 disadvantages to consumer credit?
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1. Overspending
2. Loss of income 3. Can lead to damaged relationships (family, etc.) |
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What is Open-Ended Credit?
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A line of credit in which loans are made on a continuous basis and the borrower is billed periodically for at least partial payment.
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What are 2 things to look for when choosing a credit card?
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1. grace period of 25 days.
2. be aware of some credit cards that offer "no fees" or low interest but start charging interest immediately following the purchase. |
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What is a "don't" when choosing a credit card?
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DO NOT PAY THE MINIMUM MONTHLY AMOUNT... the longer you are paying it off, the more interest there will be.
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What is the risk of co-signing for a loan?
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The lender can collect the entire debt from you (garnish your wages, etc.) if the person you signed for misses one payment.
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