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Sources of Borrowing

Sources of Borrowing. Loans and Credit. Financial Institutions. Commercial Banks Main function to accept deposits, lend money, and transfer funds among banks, individuals and businesses Wells Fargo, PNC, etc…. Savings and Loan Associations

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Sources of Borrowing

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  1. Sources of Borrowing Loans and Credit

  2. Financial Institutions • Commercial Banks • Main function to accept deposits, lend money, and transfer funds among banks, individuals and businesses • Wells Fargo, PNC, etc…. • Savings and Loan Associations • Depository Institution that accepts deposits and lends money

  3. Financial Institution • Savings Bank • Depository institution set up to serve small savers overlooked by commercial banks • Credit Union • Depository institution owned and operated by its members. Savings accounts and low interest loans for members • Finance Companies • Takes over contracts for installment debts. Makes loans directly to consumer at high interest rate.

  4. Charge Accounts • Charge Account • Allows consumers to buy goods or services and pay for them later • Regular Charge • 30 day limits, Credit Card (Kohls) • Revolving Charge • Make additional purchases from same store even if bill is not paid • Installment Charge • Purchased and paid for with equal payments over a set period of time.

  5. Finance Charges and Annual Percentage Rate • Finance Charge • Cost of credit expressed monthly • Credit Card • Annual Percentage Rates • Cost of credit expressed as a yearly percentage • Student Loans

  6. Credit vs. Debit • How does a Debit Card differ from a Credit Card?

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