A2A (Account to Account): An electronic transfer that occurs from one account to another account usually at a different financial institution.
Annual percentage rate (APR): Annual interest rate expressed as a percentage of the loan balance.
Asset: Anything of value that a person or organization owns. This could include cash, property, inventory, car, house, or farm equipment.
ATM card: A plastic card that allows you to get money, deposit funds, or transfer funds from an automated teller machine. It’s different than a debit card in that it only works at the ATM.
Bankruptcy: The result of a court decision to excuse some or all debts of a person. Bankrupt people usually have a hard time getting credit later, and may lose property as a result.
Beneficiary: Someone who benefits by receiving money from an insurance policy, will, or an account left to them.
Budget: A tool individuals use to plan earnings and expenses for a period of time. A personal budget lists income and expenses such as food, housing, clothes, utilities, and entertainment.
Certificate of deposit (CD): A debt instrument from a financial institution, usually starting at $500 or $1000. You are lending the financial institution that amount for a specific time for which you earn a specific amount of interest. If you want your money back early, you will usually have to pay a penalty.
Collateral: What you give up if you don’t repay a loan. The collateral on a car loan is usually the car itself. If you don’t make the payments on time, the lender can take the car and sell it to pay off the loan.
Compounding: Earning interest on principal saved and on previously earned interest.
Co-sign: To accept joint responsibility for repaying someone else’s loan. If the borrower does not make the loan payments, the co-signer is liable for the debt and must pay.
Credit card: A plastic card that allows you to borrow money or buy products and services on credit with your signature. The lender that issues the card puts a dollar limit on its use, depending on your creditworthiness.
Credit history: A record of loan repayment. Financial institutions send information on the loans they make to the three credit reporting companies to keep as a reference for future lending. As a consumer, you have the right to review your record and correct inaccuracies.
Debit card: A plastic card that you can use like a credit card. The difference is that a credit card lets you borrow money for a purchase, while a debit card makes payment immediately and electronically from your checking account.
Debt consolidation loan: A loan used to repay several other loans. Debt consolidation usually reduces the borrower’s monthly payments by lowering the interest rate or extending the repayment period or both.
Default: Failure to follow the terms of a loan agreement, such as not making timely payments.
Fair Credit Reporting Act (FRCA): The federal law that promotes accuracy and ensures the privacy of the information in consumer reports.
Gift Cards: A VISA or MasterCard bought for a certain amount to give as a present to someone you know. They are common gifts at weddings, birthdays, or graduation parties.
Grace period: Time during which a lender doesn’t charge interest on credit card purchases.
Gross income: The amount a person has earned before payroll deductions are subtracted.
Individual retirement account: A special federal program that allows you to delay the payment of taxes on some money you save, which reduces the amount of tax owed.
Interest: An amount paid for the use of someone else’s money. The credit union pays you to use the money you save there.
Liability: Something owed to another party such as a loan or debt.
Member: Someone who belongs to a credit union.
Money market account: A special type of savings account with limited withdrawals and higher interest rate than a regular savings account.
Money order: A legal document that is a promise to pay the person named on it a specific amount of cash when presented at a financial institution. Money orders are an alternative to paying by cash or check.
Mortgage: A loan to buy real estate and secured by real estate.
Net income: Your total earnings minus your required or elective payroll deductions.
Overdraw: To write a check for more money than you have in your account. A penalty is charged for being overdrawn.
Overdraft protection: A line of credit established to protect an account holder from being overdrawn.
Prepaid card: These plastic cards function much like a traveler’s check; the user pays money up front, gets a plastic card authorizing a certain amount of money, and then spends it over time.
Principal: The amount borrowed that remains unpaid-not including future interest.
Share: A given amount of money you deposit with a credit union to become a member.
Share draft: A credit union term for a check.
Stop payment: To tell your credit union not to honor a specific check that you have written, usually because you are unhappy with a service or product that you paid for.
Travel Cards: A re-loadable VISA or MasterCard used when traveling instead of travelers checks.
W-2 form: A tax form that you get from your employer that reports your wages earned for the year along with federal and state taxes withheld.
W-4 form: A tax form you get from your employer and fill out to help them determine how much taxes to withhold from your account.
