Chapter 6 PMM

Short-term needs include things such as home ownership, education of children, and retirement.

For use of the saver’s money, the financial institution pays the saver money called interest.

A regular savings account pays much less interest than a certificate of deposit.

You may be charged a service fee if you order checks from your bank or use a teller to complete a bank transaction for you.

Certificates of deposit are more liquid than regular savings accounts.

Compound interest is interest computed on the original principal plus accumulated interest.

The law requires all financial institutions to tell consumers the annual percentage yield on their accounts.

Commercial banks offer many banking services and are very competitive

There are around 500 mutual savings banks across the country.

Savings and loan associations usually offer savings and checking account services.

Liquidity is a major advantage to regular savings accounts.

Interest rates on money market accounts go up and down with the securities market.

Money market accounts are not subject to early withdrawal penalties.

Convenience is a reason why many people choose a financial institution.

Your goals for saving money will affect your choice of a financial institution.