WISE Financial Literacy FCVersion en ligne Match the term with the correct definition. (Click on the term, then click on the correct definition.) par Kristine Vester 1 Group 1 2 Group 2 3 Group 3 4 Group 4 5 Group 5 6 Group 6 7 Group 7 8 Group 8 9 Group 9 10 Group 10 11 Group 11 12 Group 12 13 Group 13 14 Group 14 15 Group 15 16 Group 16 17 Group 17 18 Group 18 19 Group 19 20 Group 20 21 Group 21 22 Group 22 23 Group 23 U.S. Internal Revenue Service (IRS) Responsible for the collection of federal taxes and the enforcement of tax laws. Federal Reserve (FED) Regulates banks and the nation’s money supply. Consumer Financial Protection Bureau (CFPB) Educates consumers and enforces laws and regulations about credit. Interest at Banks A bank is a business and wants to make money. To do that, banks have to have money. In order to have money, banks encourage people to deposit money in the bank. Banks pay depositors a reward for depositing money with the bank. Once people deposit money, the bank can use most of this money to make loans. The bank makes money because the interest it charges on these loans is higher than the interest is pays on the deposits. Certificate of Deposit (CD) An investment option that is an agreement to keep money in an account for a specified period of time. These usually earn higher interest rates, but can have penalties for early withdrawals. When an individual cashes in before maturity, banks have the right to charge that person a penalty. Bounce A check will do this if there is not enough money in the bank account of the person who wrote the check to pay the amount on the check. If this happens, the bank charges the person who wrote the “bad” check a fee. Overdraft Protection A service that banks can offer that allows account holders to temporarily make purchases with a debit card or write checks even if the person does not have enough money in his/her account to cover the purchase or amount on the check. The bank is effectively making a short-term loan to the account holder so that the debit card is not declined or the check is not bounced. However, the bank charges a fee whenever the service is used. ATM Cards Allow a person to get cash and information concerning his/her bank balance at an automated teller machine. A person cannot get cash anywhere in the world with no fee. If the person goes to an automated teller machine of the bank where he/she has an account, he/she will be able to withdraw cash with no fee. But, if he/she goes to an automated teller machine of another bank, he/she will most likely have to pay a fee if he/she wants to withdraw money. Liquidity The ease with which assets can be converted to cash and spent. Examples include a checking account because the funds are easily accessible and can be sued with no penalties or fees. Non-examples include individual retirement accounts and bonds because it may take a day or more and there are rules determining when the money can be accessed and used. Direct Deposit When employers deposit their employees’ net pay into a designated bank account via an electronic funds transfer (EFT) rather than issuing them a check for the employee to deposit. This service can be good because the funds are available immediately whereas checks can take 2-5 days to clear. It also avoids the risk that a check might be lost. Debit Card A card issued by a bank, directly linked to a checking or savings account. With this card, a person can pay for purchases and the purchase amount is immediately withdrawn directly from the person’s checking or savings account. In order to use one, a person must have a personal identification number (PIN). Stop Payment Order A request made by the account holder for the bank not to pay a check that has already been written. It can only be done if the check has not already been processed by the recipient’s bank. Using one of these will usually result in a fee. Credit Buying goods and/or services now and paying back the money in the future, generally with interest. Comprehensive Part of one’s auto insurance that covers damages to one’s car caused by something other than a collision, such as fire, theft, vandalism, hail, or flooding. Renter’s Insurance Covers losses to the personal property of a renter in case of theft or fire. Ideally, one should list each personal item a person wants covered and its value or cost to be replaced in order to determine the amount of coverage to have on this policy. The policy should be for an amount equal to this replacement cost. Premium Payment made to an insurance company to cover the cost of a policy. Payments are made periodically, generally each month, quarterly, every six months, or once a year. One factor that determines the amount is the deductible. Typically, the higher the deductible, the lower the premium. Deductible The amount a policy holder has to pay before insurance coverage kicks in and the insurance company pays a claim. Term A type of life insurance. A policy that lasts for a specific amount of time and has a specific face value that is only paid on the death of the person. Whole Life A type of life insurance. It lasts for the length of the person’s life and does not have a specific face value because it can accumulate cash value from a portion of the premium that the policy holder pays. US Treasury Bond A loan to the US Federal Government. They are backed by a Government promise to pay the holder periodic interest payment and to repay the loan when the bond matures. Not subject to price fluctuations and are seen as safer than stocks or mutual funds because the US Government has never failed to deliver on its promise. Public Corporation A company becomes this when it sells a share of the ownership in the company through a stock exchange to investors in order to raise money. Mutual Fund Managed by a professional who is responsible for selecting which stocks to buy and for tracking and reporting on the performance of the investments to the investors. Bonds Loans investors make to a corporation or government body in exchange for regular interest payments and the return of principal at a future date. Companies issue these to raise money for a variety of purposes. Unlike stocks, owners of these do not have ownership rights in the company.
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