Chapter Summaries with Key Terms and Academic Vocabulary

Chapter 21: Banking and Credit

Section 21.1 Summary
An interest-bearing savings account with compounded interest is a good way to save for the future. A money market account pays a higher interest but requires a higher balance. Other ways to save and invest include savings bonds and certificates of deposit. You should start saving for your retirement right away. Types of retirement plans include 401(k) plans and individual retirement accounts (IRAs). Tax-deferred retirement plan options for the self-employed include Keogh plans and simplified employee pension (SEP) plans.

Section 21.2 Summary
A check withdraws money from a checking account. If you have a checking account, you must manage it to be sure you have enough money to pay for checks and withdrawals. Each month, you should reconcile your check register with the bank statement. Other banking services include electronic funds transfer and online banking. Credit allows you to buy something now and pay later. Forms of credit include loans and credit cards. Advantages include convenience and the ability to make large purchases. Disadvantages include high costs and debt.

Key Terms
deposit
withdrawal
balance
interest
dividend
certificate of deposit (CD)
401(k) plan
individual retirement account (IRA)
Keogh plan
simplified employee pension (SEP)
check register
endorse
reconcile
electronic funds transfer (EFT)
online banking
credit
down payment
finance charge
annual percentage rate (APR)
debt
credit bureau

Academic Vocabulary
accrued
redeem
transfer
encryption