Personal Finance: Chapter 5

direct deposit an automatic deposit of net pay to an employee’s designated bank account
automated teller machine (ATM) a computer terminal that allows a withdrawal of cash from an account
debit card a cash card that allows you to withdraw money or pay for purchases from your checking or savings account
point-of-sale transaction a purchase by a debit card of a good or service at a retail store, a restaurant, or elsewhere
commercial bank a for-profit institution that offers a full range of financial services, including checking, savings, and lending
savings and loan association (S&L) a financial institution that traditionally specialized in savings accounts and mortgage loans but now offers many of the same services as commercial banks
credit union a nonprofit financial institution that is owned by its members and organized for their benefit
certificate of deposit (CD) a savings alternative in which money is left on deposit for a stated period of time to earn a specific rate of return
money market account a savings account that requires a minimum balance and earns interest that varies from month to month
rate of return the percentage of increase in the value of your savings from earned interest
compounding the process in which interest is earned on both the principal—the original amount you deposited—and on any previously earned interest
annual percentage yield (APY) amount of interest that a $100 deposit would earn, after compounding, for one year
overdraft protection an automatic loan made to an account if the balance will not cover checks written
stop-payment order a request that a bank or other financial institution not cash a particular check
endorsement the signature of the payee, the party to whom the check has been written
bank reconciliation a report that accounts for the differences between the bank statement and your checkbook balance

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