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Financial Services
CFM
| Term | Definition |
|---|---|
| What is the downside of using only cash for financial transactions? | There's no built in proof of payment if things go wrong, it's tempting to waste cash on lots of small, silly purchased - leaving you broke and wondering "where did it all go?" When it's time to pay the bills. Once cash is lost or stolen, it's all gone. |
| Why isn't using only credit cards the best option, either? | Considering the fact that the interest paid on borrowed money has the potential to mushroom into a mountain of debt if you're not careful. |
| Why can't you use a bank savings account for every day spending? | Federal regulations limit account holders to more than 6 wirhdrawks from a savings (or money market) account each month. Keeping all your money in one account makes it too easy to tap into and drain funds you were saving for more important things. |
| Check | A written order telling thr bank who to pay and how much. Singing your name at the bottom means you agree to pay the amount "on demand" or as soon as the person you've written the check to deposits the check. |
| Payee | The person you've written the check to. |
| Benefit of using a check: Convenience | Dropping a check in the mail is less hassle than standing in line to pay with cash or get a money dealer. |
| Benefit of using a check: Proof of payment | Your cleared check serves as proof of payment for goods, services, and charitable donations. |
| Benefit of using a check: Safety | Lost or stolen checks can be replaced. You can also request to stop-payment your order to prevent a check of yours from being cashed in case of suspected theft or if you realize it was written incorrectly. |
| Stop-Payment Order | Prevent a check from being cashed in case of theft or error written on the check. |
| Benefit of using a check: Debit Card Backup | Write a check to yourself and get cash from a bank. |
| Benefit of using a check: Direct Deposit | In some cases, you'll need to provide your employer with a voided blank check from your account to enroll in automatic deposit. |
| Automatic Deposit | Your paycheck is eventually deposited into your account. |
| Benefit of using a check: Interest | Some checking accounts pay interest on your average balance. |
| Cons of using a check: Delayed Deduction | No idea when the payee will deposit your check. The amount won't be deducted from your account until the cashed check is received at your bank and processed. Keep track of the checks you write to compare with what is proceeded at the bank. |
| Cons of using a check: Check Fraud | A stolen check or the information on your check might be used to access the money in your account. Guard your checks from getting into the wrong hands. |
Created by:
Blissful_Olive
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