Glossary

• ACH – automatic clearing house –this is used to transfer money to or from a bank account.
• Annual Percentage Rate (APR) – This is the price one pays for credit, expressed as an annual rate. APR is usually not identical to the contract interest rate.
• Balance – This is the total amount of money in an account.
• Bankruptcy – This is a process by which someone is unable to pay their debts and their assets become subject to a court supervised liquidation plan.
• Budget – This is a strategy for spending and saving the money you make.
• Caps –This is the largest that an interest rate can be on an adjustable rate mortgage used to buy a home.
• Cash advance –This is a type of loan, often taken out in an emergency that is used to cover costs until the borrower’s payday comes up.
• Charge off – This is a declaration by a creditor that a certain loan or debt will not be collected. Sometimes this debt is instead assigned to a collection agency.
• Checking account –This is a type of account kept in a bank for safety purposes and to accrue interest. The money is accessible through writing checks or using an ATM card.
• Collateral or security –This is a way to ensure the payment of debt by offering an asset if the debt is not paid.
• Compound interest –This is interest that’s calculated on the balance of a loan and that includes the interest that is unpaid.
• Co-signer –This is a person who signs onto a loan in addition to the actual borrower and takes on responsibility for the loan.
• Credit –This is when you buy something now with the goal of paying for it later.
• Credit application –This is a request for credit that is either written or online, submitted to a lender.
• Credit bureau –is a type of company that keeps track of things that affect credit. Lenders use this type of data when determining whether or not to approve credit applications.
• Credit card –This is a type of card that is used for making purchases with the intent of paying for them at a later date.
• Credit counseling –This is a type of help advising consumers how to repay their debt and manage their money.
• Credit limit – is the most that you can be charged on your credit card or on your line of credit.
• Credit line (or personal line of credit) –This is the amount of money you can borrow against your account. Once you have repaid this credit, you may borrow again.
• Credit report –This is information about a person’s credit history including information about old and outstanding loans and about anything else that can affect credit.
• Creditor – This is a person or an organization who you owe money to.
• Debit card –This is a card that is liked to a bank account that allows you to withdraw money from said account.
• Debt – This is money that you owe to a person or organization.
• Debt consolidation –This is a method for controlling debt that requires combining all of your loans, with the help of an authorized financial institution, and negotiating one reasonable monthly payment.
• Default – This is the inability to repay your debt based on your loan agreement.
• Delinquency –This is making a late payment on a loan.
• Direct Deposit –This is receiving money through an electronic transfer rather than receiving a paper check.
• Equal Credit Opportunity Act – This is a federal law that prevents discrimination when it comes to lending money.
• E-Signature or Electronic Signature – This is a type of software that allows you to submit your signature electronically rather than in written form.
• Fair Credit Reporting Act – This is a federal law that allows people to have access to their credit histories to contest any incorrect information.
• Fair Debt Collections Practices Act – This is a federal law that prevents debt collectors from harassing or abusing those they are trying to collect debt from.
• Federal Deposit Insurance Corporation (FDIC) – This is a federal agency that insures the money that individuals deposit in certain institutions for up to $100,000.
• Finance charge – This is the amount a consumer pays for credit, expressed in dollars.
• Fixed interest rate –This is an interest rate that remains the same for the term of the loan.
• Foreclosure –This is a process when a borrower has defaulted on a loan and the collateral on that loan must be sold to repay the loan.
• Installment loan – This is a type of loan that is repaid over time and over a number of payments.
• Interest – This is the amount of money that someone is charged for a loan.
• Interest rate –This is the rate at which money is charged for taking out a loan, usually stated as an annual percentage.
• Judgment –A decision made by a court.
• Late payment fee – This is a penalty for making a loan payment later than the agreed upon date.
• Lease – This is an agreement that allows a person to borrow an asset. The borrower pays to borrow the asset and the asset is returned once the term ends.
• Lender –This is an individual or a company that lends money or offers to lend money.
• Liable –This is to be legally responsible for something.
• Lien – This is an interest in property held by a creditor that permits the creditor to foreclose to recover on debts.
• Loan – This is an agreement to repay money that has been borrowed.
• Loan agreement –This is a contract that details the repayment and any other particulars of the loan.
• Mortgage loan –is a loan taken out specifically to buy property.
• Public record – This is official government information about a person’s financial responsibilities and their history.
• Refinance –This is a loan taken out with more favorable terms to repay an old loan with less favorable terms.
• Repossess –This is the acquisition of a piece of property that is taken because the consumer could not repay a loan.
• Right of rescission –This is the ability of a borrower to cancel a contract within three business days after signing it.
• Savings account – This is money kept in a financial institution that can earn interest.
• Secured loan – This is a type of loan in which the borrower puts up collateral which can be sold if the loan cannot be repaid.
• Simple interest – This is interest paid on the unpaid principle balance.
• Title –This is a document that serves as legal proof of ownership.
• Truth in Lending Act –This is a federal law that forces lenders to make certain disclosures in financial promotions.
• Unsecured loan –This is a type of loan that funded without any security or collateral.
• Variable interest rate – This is a type of interest rate that may change based on an index.
• Yield –This is the interest on a loan.