Banking and Credit Flashcard

Front

What is the main difference between a checking account and a savings account?

Back

The main difference is the purpose of each account.

Front

Explain the concept of compound interest in the context of a bank account.

Back

Interest calculated on the initial principal and also on the accumulated interest of previous periods.

Front

What are the advantages of having a certificate of deposit (CD) account?

Back

Higher interest rates and guaranteed returns

Front

What factors can affect your credit score?

Back

Payment history, credit utilization, length of credit history, new credit, and types of credit used

Front

How often can you request a free copy of your credit report from each of the three major credit bureaus?

Back

Once every 12 months

Front

What is the difference between an annual fee and a late payment fee on a credit card?

Back

An annual fee is a yearly charge for having the credit card, while a late payment fee is a penalty for not making the minimum payment by the due date.

Front

What is the meaning of APR on a credit card statement?

Back

Annual Percentage Rate

Front

Explain the concept of a credit limit on a credit card.

Back

The maximum amount of money that a cardholder is allowed to borrow on the card.

Front

What are the main differences between a commercial bank and a credit union?

Back

Ownership, profit distribution, membership eligibility, and focus on community involvement

Front

Describe the services offered by an online bank compared to a traditional brick-and-mortar bank.

Back

Online banks offer 24/7 access, lower fees, and higher interest rates compared to traditional brick-and-mortar banks.