Make the most of your money.
Glossary of Terms
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
A
Acceleration Clause
A provision allowing the lender to ask for full payment at once if loan installments are not paid when due
ACH
see automated clearing house
ALL
see allowance for loan losses
American Bankers' Association (ABA)
A trade association serving banks and trust companies in the areas of banking, professions, education, government relations, communications and member relations
Amortize
Provision for repayment of a loan in Preauthorized Transfers over a stated period
Annual Percentage Rate (APR)
The nominal rate of interest expressed as a percentage
APR
see annual percentage rate
Annual Percentage Yield (APY)
The nominal rate of interest plus the effect of compounding of dividends during the year
APY
see annual percentage yield
ATM
see automated teller machine
Automated Clearing House (ACH)
A computer based facility that settles payments and deposit transactions between member financial institutions
Automated Teller Machine (ATM)
Unmanned equipment a customer uses to obtain financial services, generally activated by a plastic card, push buttons and a personal identification number for each user
Automatic Stay
A court injunction that goes into effect the date of a bankruptcy filing, with stiff penalties for violation by a creditor. The stay prohibits any action to collect on a claim.
B
Balloon Note
A loan in which the final payment is considerably higher than the other regular payments
Bankrupt
A debtor who is judged legally insolvent and whose remaining property is administered for or distributed among creditors
Bankruptcy
A court action declaring a person free of most debt, due to inability to pay (see Chapter 7, 11 & 13)
Bond
(1) A legal contract by, which an insurance company agrees to pay, within stated limits, for financial loss caused by the default or dishonest acts of a third party; (2) long-term corporate or government liability, usually issued in denominations of $1,000.00. Issuer pays interest periodically and face value at maturity
Bridge Loan
A short-term loan made in anticipation of long-term financing
Bylaws
The rules the shareholders and board of directors adopt to define the field of membership, set the par value of shares, and give the general method for carrying out corporate functions
C
Certificate of Deposit (CD)
A money market instrument that is a marketable receipt for funds deposited in a financial institution for a specified period of time and at a specified rate of interest
Chapter 7
The portion of the Bankruptcy Code that discharges a debtor from all obligations, through the sale of all non-exempt assets and disbursement of funds to creditors holding valid claims
Chapter 11
A section of the Bankruptcy Code that allows a debtor (usually a business) to maintain control of the business while reorganizing. A committee of creditors approves the debt restructuring and repayment schedules
Chapter 13
A section of the Bankruptcy Code that allows the bankruptcy court to distribute to creditors a portion of a debtor's paycheck. Debts aren't wiped out, and debtors retain control of their assets. Also called the "wage earner plan"
Charge Off
To treat as a loss
Closed-End Credit
Credit contracts that specify the time period over, which the loan or sales contract will be repaid, the total amount due, and the number of payments and due dates on, which they fall
Collateral
Something of value pledged to assure loan repayment that is subject to seizure upon default
Co-maker
Is a person who signs a loan with another person and is also responsible for the debt. A cosigner usually derives equal benefit from the loan
Co-signer
A person, other than the borrower, who signs a Note to give additional protection to the creditor granting the loan who usually does not benefit from the loan common bond. A unifying factor or characteristic among people that links them while distinguishing them from the general public
Compound Interest
Interest that is added to the principal, which begins earning interest on itself.
Consolidation Loan
Combining several debts into one loan, usually to reduce the annual percentage rate or the dollar amount of monthly payments by extending over a longer period
Credit
An arrangement to receive cash, goods or services now and pay for them in the future
Credit Application
The method, either in written form or oral interview, of obtaining information about a borrower wanting credit
Credit Bureau
An organization that gathers information about a consumer's creditworthiness and to, which financial institutions may apply for such information about a prospective borrower
Credit Card
An instrument issued (with or without a fee) for the cardholder's use in obtaining money, goods or services, by creating a liability for the card user in favor of the issuing institution
Credit Disability Insurance
Insurance that provides loan payments on behalf of a borrower who is temporarily disabled
Credit Insurance
Insurance issued on accounts receivable that pays if the accounts receivable prove un-collectible
Credit Disability and Life Insurance
Insurance issued on the debt of borrowers to cover payments in case of death or disability.
Credit Life Insurance
Is a program that pays the unpaid balance of a loan, up to a maximum payoff limit, upon the cardholder's death or disability credit limit. The estimate of the amount of credit that can be extended to a borrower without undue risk, based on the borrower's credit experience
Credit Rating
A report on the credit standing of a prospective borrower
Credit Risk
A quantitative, statistical evaluation method used to establish a credit applicant's creditworthiness
Credit Union
A voluntary, non-profit cooperative association organized by a group of people having a common bond. It is democratically administered to encourage thrift among members, create credit at a low rate and provide maximum service at minimum cost
D
Debit Card
A plastic card that financial institutions issue to debit customers' deposit accounts. Because no billing is involved, a debit card tends to reduce float
Direct Deposit
Movement of net-pay funds (e.g. payroll deposits, social security benefits) directly to an account in a depository institutions, usually made electronically
Discharge
Is a court order releasing the debtor from legal obligations to repay a debt. Exceptions are if a debt is reaffirmed and if a creditor files to exempt a debt from discharge
Discharge Of Lien
Recorded release of a lien when debt has been repaid
Dividend
A share of earnings distributed to shareholders of a Credit Union
E
EFTA
see Electronic Funds Transfer Act
Electronic Funds Transfer Act (EFTA)
Title IX of the Consumer Credit Protection Act establishing the basic rights, liabilities, and responsibilities of consumers using electronic money transfer services and financial institutions offering these services
Electronic Funds Transfer System (EFTS)
Payment methods in, which the processing and communications necessary to effect economic exchange and the processing and communications necessary for the production and distribution of services incidental to economic exchange are dependent on using electronics
Equal Credit Opportunity Act (ECOA)
The federal law that prohibits discrimination against an applicant for credit on the basis of age, sex, marital status, race, color, religion, national origin and other factors
F
Federal Credit Union (FCU)
A Credit Union the federal government, through the National Credit Union Association, charters, examines and supervises
Federal Reserve Board (FRB)
The seven member governing body of the Federal Reserve System
Federal Reserve System
The central banking system of the United States, which Congress created, consisting of the Federal Reserve Board, 12 regional Reserve Banks and member depository institutions that are subject to reserve requirements fee income
FHA
see Federal Housing Authority
Financial Institution
An institution that uses its funds chiefly to purchase financial assets as opposed to tangible property
First Mortgage
Real estate loan that creates a primary lien against real property and has first priority over all other liens
G
Garnishment
Court sanctioned procedures by, which a portion of a debtor's wages is set aside to repay creditors
Group Credit Life Insurance
An insurance policy designed to pay off the loan balance of a Credit Union member in the event of death
H
Home Equity Loans
A loan secured by the value of a house, minus existing mortgage debt, provided as a straight payout loan with a fixed repayment schedule, or as an open-ended line of credit with a minimum monthly payment
Home Mortgage Disclosure Act
Is the 1975 federal legislation that requires depository institutions to disclose the location of certain residential loans on an annual basis. This act is implemented through Regulation C of the Federal Reserve
Housing and Community Development Act (HMDA)
Under this 1987 federal legislation, financial institutions holding loans secured by a principal residence must notify delinquent homeowners of the availability of homeowner counseling. The Department of Housing and Urban Development administers the housing counseling portion of this act.
Housing and Urban Development (HUD)
The federal agency that promotes housing development. The Federal Housing Administration (FHA), and the Government National Mortgage Association (Ginnie Mae) are within the Housing and Urban Development Department
HUD
see Housing and Urban Development
I
Individual Retirement Account (IRA)
A tax-sheltered savings plan open to individuals who have earned income during a certain year
Interest
The charge for a financial loan, usually a percentage of the amount loaned
Interest Rate Ceiling
The maximum interest rate stated on an adjustable rate loan.
Interest Rebate
Money returned to a borrower, representing a portion of the interest paid on a loan; the percentage of interest refunded usually is declared at the end of the year. Also, the portion of unearned interest returned to the borrower if the loan is repaid before the date designated for full payment
Internal Revenue Service (IRS)
A government agency responsible for administering and enforcing internal revenue laws and related statutes
Investment
Anything acquired to produce income or a profit, or, in Credit Unions, surplus cash deposited in other organizations to earn interest or dividends
Investment Yield
Annualized ratio of investment income divided by the average balance of investments
IRA
see individual retirement account
IRS
see Internal Revenue Service
J
Joint Account
An arrangement for two or more people, enabling all to use an account and with credit to assume liability to repay
Judgment
A court-approved legal document allowing repossession of collateral or collection of deficiencies
K
Keogh
A program that enables self-employed individuals to defer payment of taxes on a percentage of their income until retirement
Keogh Account
A tax-sheltered savings plan for self-employed individuals, authorized by the Self-Employed Individuals Tax Retirement Act
Kiting
Making use of fictitious balances by drawing against uncollected funds or depositing and drawing checks between accounts at two or more banks and thereby taking advantage of the float
L
Late Charge
A percentage of the payment due that financial institutions charge for being late or paying after a predetermined date
Late Payment
A payment on, which financial institutions may impose an additional charge because payment was made after the due date
Liability
A debt or legal responsibility to repay debt
Lien
A claim that one person has upon the property of another, as security for debt
Loan Draft
A payment mechanism that enables Credit Union members to draw against a prearranged line of credit
Loan Officer
A Credit Union official who acts on member loan applications within the limits of the Credit Union's lending policy
M
MATT
A service that allows our members to access their accounts via the telephone
Maturity Date
Date on, which final payment is due on a loan or a certificate is matured.
Member
A person holding at least one Credit Union share who can receive the Credit Union's financial and related services and, depending on age, has a right to vote at an annual meeting
Minor
A person who has not reached the age at, which the law recognizes a capacity to make contracts
Mortgage
A legal instrument by, which a borrower gives a creditor a lien on a property as security for a loan; the instrument creates the lien
Mortgage Note
The legal contract in, which the borrower agrees to repay a loan secured by a real estate mortgage and stipulates the conditions of repayment
Mortgage Servicing
An arrangement in, which the servicing Credit Union, for a fee, provides the maintenance of all mortgage loan records, billing and collection and distribution of principal and escrow accounts
Mortgagee
Lender of money on the security of a mortgage
N
NACHA
see National Automated Clearing House Association
National Automated Clearing House Association (NACHA)
The national association that establishes the standards, rules, and procedures that enable depository financial institutions to exchange automated clearinghouse payments on a national basis
National Credit Union Administration (NCUA)
An independent agency of the federal government responsible for chartering, insuring, supervising, and examining federal Credit Unions, and for administering the Central Liquidity Facility and the National Credit Union Share Insurance Fund
National Credit Union Share Insurance Fund
The fund to ensure members' accounts in all federal Credit Unions and some state Credit Unions
NCUA
see National Credit Union Administration
NCUSIF
see National Credit Union Share Insurance Fund
Negotiable
All checks and drafts, including: personal, bank, cashier's and third-party, money orders, and promissory notes. For purposes of the CTR, all traveler's checks shall also be considered negotiable instruments whether or not they are in bearer form.
Note
A written document that is recognized as legal evidence of debt, promising payment of a specified sum of money on a certain date. (Also called promissory note)
O
OCC
see Office of the Comptroller of the Currency
Outstanding
unpaid
Overdraft
A line of credit permitting a person to write drafts/checks for more than the account balance, with interest charged on the amount borrowed
P
Payment
Total sum of money borrowed, plus all finance charges, divided by the number of months in the term of the loan
Payroll Deduction
An agreement entered into between employer and employee, allowing the employer to deduct a given amount from the employee's salary to be transferred to a Credit Union or other organization
Payroll Deposit
A system that enables firms to pay their employees, without writing payroll checks, by direct deposit of funds to the employee's account
Points
A one-time charge, also known as a discount, used to adjust the yield on the loan to market conditions. Each point equals 1% of the principal amount
Posting
The process of recording credits and debits to individual account balances
Power Of Attorney
Written authorization to act as another's agent
Principal
The actual amount of a loan before finance charges and other charges are added or deducted
R
Reaffirmation
An agreement between the debtor and creditor, made before discharge and filed with the court, that the debtor will repay an obligation continuing beyond the discharge date
Refinance
Revise, renew, or reorganize existing debt by incurring a new debt that incorporates or pays off existing debt
Refund
A portion of a finance charge returned to the borrower for paying off a loan before maturity
Regulation B-Equal credit Opportunity Act
A federal law that prohibits discrimination against an applicant for credit on the basis of age, sex, marital status, race, color, religion, national origin and other factors
Regulation C-Home Mortgage Disclosure Act
See Home Mortgage Disclosure Act
Regulation CC
A Federal Reserve regulation governing funds availability disclosure
Regulation DD
Is the Federal Reserve regulation that implements the Truth in Savings Act. It establishes rules governing deposit accounts, including: the initial disclosure, periodic statements and advertising. The Truth in Savings Act requires NCUA to establish similar regulations
Regulation E
A Federal Reserve regulation governing electronic funds transfers. It was designed to ensure a minimum level of protection to consumers
Regulation J
A Federal Reserve regulation governing check collection and funds transfer
Regulation M
Is a Federal Reserve regulation that implements the consumer leasing portions of the Truth-in-Lending Act. It requires leasing companies to disclose in writing the terms and full costs of leases on all property used for personal or household purposes for a time period greater than 4 months
Regulation Z
See Truth In lending definition
Repossession
Act of reclaiming durable goods purchased on credit, for, which payment is past due
Reverse Mortgage (REM)
A mortgage instrument that allows an elderly person to live off the equity of a fully paid-for house
Right to Rescind
The 3-day time period that the consumer has to revoke a loan decision when entering into a transaction that will result in a mortgage/lien/security interest on a home. This Right of Rescission does not apply to purchases or construction loans.
S
Scheduled Payment
Payment due at a specific time, such as installment payments in a credit agreement
Second Mortgage
A mortgage on real estate that already has a first mortgage
Secured Note
A note containing a provision that, upon default, the lender may claim certain pledged property as payment of a debt
Security
Something of value a borrower pledges to assure loan repayment and, which is subject to seizure upon default
Service Charge
Finance cost related to certain conditions of a credit contract, such as the fee activated by overdrawing
Share
A given amount of money a person deposits with a Credit Union to become a member. It confers ownership rights, has a stated par value and pays dividends
Share Account
An account that does not require the holder to maintain a minimum balance greater than the par value of a share or to give notice of intent to withdraw
Share Certificate
A money market instrument that is a marketable receipt for funds deposited in a financial institution for a specified period of time and at a specified rate of interest
Share Draft
A truncated payment mechanism that enables Credit Union members to withdraw funds or pay bills from their Credit Union share account- similar to a check
Share Insurance
Insurance that protects a Credit Union member's savings against loss
Short-Term Debt
Loans of five years or less
Simple Interest
A method of calculating interest on an outstanding balance that produces a declining finance charge with each payment of the installment loan
Single-Lump-Sum Credit
A closed-end credit arrangement in, which the total outstanding balance is due on a specific day
Skip
Person owing money who has moved without leaving a forwarding address
Skip Tracing
Locating a skip
Smart Card
A credit or debit card containing a computer chip for identification and data storage
Smurfing
Dividing cash transactions into several parts to avoid having transactions reported to the federal government
Stafford Loan Program
A student loan program that enables participating lenders to offer federally guaranteed higher education loans with interest subsidies and generous repayment terms. Replaces the Guaranteed Student Loan Program
State-Chartered Credit Union
A Credit Union chartered, examined, and supervised by a state regulatory agency
Statement Of Account
A detailed listing periodically sent to an account holder, showing the transactions made and final balance as of a given date
Statute Of Limitations
A law that limits the time during, which certain rights are legally enforceable
Statutory Fee
Administrative costs of closing a loan
Statutory Reserve
An appropriation of undivided earnings that includes the reserve required by state and/or federal regulators
Succession Plan
A written plan to prepare for a chief executive's departure
Supervisory Committee
A Credit Union committee established to protect the financial welfare of the members by examining the affairs of the Credit Union, performing an annual audit, and reporting to regulatory agencies as required
Surety Bond
An instrument providing for monetary compensation in case there's a failure to perform any specific acts within a stated period
T
Term
The length of time designated for total repayment of a loan
Term Insurance
A life insurance plan that pays benefits only if death occurs during the policy period
Thrift Institution
A general term for mutual savings banks, Savings & Loans, and Credit Unions
T I L A
see Truth-in-Lending Act
Title
A document showing Legal ownership
Title Insurance
Contract that agrees to pay the insured for loss caused by defects of title to real estate
Title Search
A check of public records to determine current ownership of a parcel of real estate
Treasury Bills
Short-term U.S. Treasury securities issued in minimum denominations of $10,000.00 and usually having maturity dates of three, six or twelve months
Treasury Bonds
Long-term U.S. Treasury securities having maturities of more than 10 years and minimum denominations of $1,000.00
Treasury Notes
Intermediate -term U. S. Treasury securities with maturities of one to ten years and minimum denominations of $1,000.00
Trust Account
A savings account established and placed under the control of one or more persons, for the benefit of another person
Truth-In-Lending Act (T-I-L)
The section of the Consumer Credit Protection Act that requires a complete and conspicuous disclosure about credit charges in dollars and cents and as a percentage
Truth-In-Savings (T-I-S)
Is the federal legislation that requires financial institutions to disclose information about deposit account interest rates.
U
UCCC
See, Uniform Consumer Credit Code
Uniform Consumer Credit Code (UCCC)
A comprehensive consumer protection law regulating credit transactions
Unsecured Note
A loan granted on the basis of a borrower's creditworthiness and signature; not secured by any collateral
U. S. Central Credit Union
Is a corporate Credit Union whose members are other corporate Credit Unions. It provides financial and payment services to its members and helps them provide liquidity and investment products for surplus Credit Union funds
Usury
Charging more for the use of money than allowed by law
Undivided Earnings
Retained earnings not restricted for specific purposes
V
Variable-Rate Loans
Either open-end or closed-end loans having interest rates that vary with a Credit Union's cost of funds or a money market index
Verification Of Employment
Employment and income information the borrower and employer sign and send to the financial institution requesting confirmation
Vesting
The right of an employee who is covered by a contributory or non-contributory retirement plan to acquire the employer's contributions to that plan
W
Wage Assignment
An agreement permitting a lender to collect a certain portion of a borrower's salary from the borrower's employer if payment is not made as specified in the credit contract
Waiver
The voluntary relinquishment of a right to property or to a claim against another's property
Wire Transfers
Orders to pay funds electronically via wire or phone instructions. For example, the Federal Reserve Wire Network transfers funds between depository institutions, the United States Treasury, the Federal Reserve and other government agencies
World Council of Credit Unions (WOCCU):
An international organization of national and regional Credit Union leagues and confederations that facilitates and coordinates the development of Credit Unions around the world
Y
Yield
Annual rate of return, expressed as a percentage of the amount
