1 / 16

PERSONAL Finance/Banking CREDIT , BUDGET, AND CHECKING ACCOUNTS

PERSONAL Finance/Banking CREDIT , BUDGET, AND CHECKING ACCOUNTS. Chapters 25, 26, 28, 29. What is Credit? Chapter 25. Credit - an agreement to get money, goods, or services now in exchange for a promise to pay later .

roden
Download Presentation

PERSONAL Finance/Banking CREDIT , BUDGET, AND CHECKING ACCOUNTS

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. PERSONAL Finance/BankingCREDIT, BUDGET, AND CHECKING ACCOUNTS Chapters 25, 26, 28, 29

  2. What is Credit? Chapter 25 • Credit - an agreement to get money, goods, or services now in exchange for a promise to pay later. • Creditor – Person who lends money or provides credit. • Debtor – The one borrowing money or using credit. • Interest – A fee that creditors charge for using their money.

  3. Who uses Credit? Chapter 25 • Consumer Credit - A type of credit used by people for personal reasons. • Commercial Credit – Credit used by businesses. • Credit Rating – The measure of a person’s ability and willingness to pay debts on time.

  4. Types of Credit Chapter 25 • Charge Account - Common type of short-term and medium-term credit often offered by dealers or stores. • Revolving Account – Allows you to borrow or charge up to a certain amount of money, such as $3,000, and pay back a part of the total or the entire balance for each month. • Installment Loans – Loans repaid in regular payments over a period of time. (student loans, personal loans, and home improvement loans)

  5. Short Answer • What are the factors that determine a person’s credit rating? • How can using credit cards be very costly to the consumer?

  6. Applying for Credit Chapter 26 • Credit Bureau - An agency that collects information about you and other credit consumers. • Credit Limit – The maximum amount you can spend or charge on a credit account. • Cosigner – Is responsible for a loan if you don’t make the payments.

  7. Using Credit Chapter 26 • Down Payment - A portion of the total cost that you pay when you purchase a product. • Principal – The amount of money you still owe and on which the interest is based. • Secured Loan – The loan is backed by collateral. • Unsecured Loan – The loan is not backed by collateral. • Annual Percentage Rate (APR)– Determines the cost of your yearly credit.

  8. Using Credit (cont.) Chapter 26 • Finance Charge - The total amount it costs you to finance the loan stated in dollars and cents. • Variable Rate – The rate will change when interest rates in the banking system change. • Cash Advance – Borrowing money on a credit card rather than use it to make a purchase. • Grace Period – Amount of time you get to pay off a debt. • Garnishment of Wages – When a creditor takes all or part of your paycheck. • Repossess – To take back collateral.

  9. Short Answer • What are the five C’s of credit (explain each)? • Why is having good credit necessary in today’s economy?

  10. Planning a Budget Chapter 28 • Money Management - The process of planning how to get the most from your money. • Budget – A plan for using your money in a way that best meets your wants and needs. • Income – The actual amount of money you earn during a given time period. • Deductions – Amounts that are taken out of your pay before you receive your paycheck.

  11. Lifestyle Costs Chapter 28 • Gross Pay - The total amount of money you earned for a specific time. • Net Pay – Your gross pay minus deductions. • Withholding – Subtracting taxes from a paycheck to be forwarded to the government. • Expenditures – Food, rent, clothing, ect.

  12. Lifestyle Costs (cont.) Chapter 28 • Fixed Expenses – Expenses occurring regularly and are regularly paid. • Variable Expenses – Expenses that fluctuate or are inconsistent. • Budget Variance – The difference between how much you planned to spend and how much you actually spent.

  13. Short Answer • List the 5 steps in creating a budget.

  14. Checking Account Basics Chapter 29 • Demand Deposits - Another term for checking accounts because each check demands a that bank release money on demand. • Interest-bearing Account – Account that earns interest on your account’s balance. • Signature Card – A record of your signature used by the bank to verify your identity. • Overdrawing – Writing checks for more money than you have in your account.

  15. Account Services Chapter 29 • Overdraft Protection – A line of credit for overdrawn checks. • Stop Payment – An order for a bank not to cash a particular check. • Debit Card – Similar to a credit card but money is taken directly from your checking account. • Check Register – A checkbook log where you keep track of all transactions. • Endorsement – The signature of the payee on the back of the check.

  16. Bank Reconciliation Chapter 29 • Bank Statement - The bank’s record of all your transactions in your checking account. • Canceled Checks – Checks you’ve written that have been cashed. • Bank Reconciliation – The process of seeing whether your records agree with the bank’s records. • Outstanding Checks – Checks that have been written but not yet cashed.

More Related