| A | B |
|---|
| direct deposit | involves an employer or financial institution placing your paycheck into a bank account |
| automatic payroll | having money withheld from your paycheck and sent directly to your savings |
| compound interest | interest drawn on the sum of the original plus interest is called this |
| interest | money that is paid for the use of money |
| NCUA | insurers of deposits in credit unions |
| FDIC | Federal insurance for depositors in commercial banks and savings and loans is provided by this organization for up to $250,000 |
| Why should you save? | for short-term needs and long-term needs and most importantly--for financial security |
| Ways to force yourself to save? | use direct deposit, use automatic payroll deductions, use a payroll savings plan through your employer |
| What personal factors determine how much you can save? | discretionary income, how important is saving to you? your needs and how willing you are to give up things now to have more in the future |
| What are the advantages of saving your money in a commerical bank? | it provides lots of services, there are many different kinds of accounts, FDIC insurance |
| How is a credit union different from a savings and loan association | they are similar--credit union is owned by its members--savings and loans usually function for home mortgages |
| Why does a regular savings account pay less interest than a certificate of deposit? | the depositor has access to his/her money at any time--there are no penalities for withdrawing the money--therefore the interest rate is lower |
| What types of penalities might you face for early withdrawal of all or part of your savings from a regular savings account? | no penalities |
| What types of penalities might you face for early withdrawal of all or part of your savings from a certificate of deposit account? | an interest penalty |
| What types of penalities might you face for early withdrawal of all or part of your savings from a money market fund? | usually not any penalities |
| What should you consider when choosing a financial institution for your savings? | Is it convenient? Is there interest-earning potential? Are there any fees and restrictions? Are the deposits insured? Is the account liquid? |
