Glossary of Terms
| TERMS | DEFINITIONS |
|---|---|
| Account | A personal record with a credit union or bank. |
| Adjustable-Rate Mortgage (ARM) | A mortgage where the interest rate fluctuates based on market conditions. |
| Automated Teller Machine (ATM) | Performs many of the same functions as a credit union or bank. ATMs can dispense and accept cash, accept checks, and provide balance inquiries. |
| Auto Pay | A feature where payments are automatically deducted from your account. Typically, users can opt in or out of this service. |
| Balance | The amount of money available in an account. |
| Bank | A financial institution that offers a variety of financial services to the public. Banks serve both account holders and non-account holders. |
| Checking Account | An account that provides direct access to your funds for everyday transactions. Funds are usually accessed via checks or debit cards. |
| Credit | The provision of resources by one party to another, typically in the form of loans or the extension of payment terms. Credit involves the expectation that the borrower will repay the borrowed amount, often with interest, over an agreed period. Creditworthiness, determined by factors like credit history and income, influences the terms and availability of credit. |
| Credit Building Loan | A loan from a credit union or bank that you repay with interest, designed to help you build credit. |
| Credit Card | A physical card that functions as a short-term loan, with a line of credit based on your creditworthiness. Credit cards are intended for daily spending, with a bill due at the end of each billing cycle. |
| Credit Score | A numerical representation of your credit risk, ranging from 300 to 850, assessed by credit-reporting agencies like Experian, Equifax, and TransUnion. Higher scores are viewed more favorably. |
| Credit Union | A member-owned financial institution that provides financial services to a specific community or group. Members enjoy similar services to those offered by banks, along with additional benefits. |
| Debit Card | A debit card is issued by your credit union/bank when you open up a A card issued by your bank or credit union when you open a checking account. It can be used at ATMs and for purchases. |
| Deposit | The act of placing money into an account. |
| Direct Deposit | When someone deposits money directly into your account without requiring a check or a visit to your financial institution (e.g., employer payroll). |
| Fee | A charge applied for a service or transaction. |
| Financial Institution | An organization that manages savings, investments, and other financial services. |
| Fixed-Rate Mortgage | A home loan with an unchanging interest rate throughout the loan term, meaning your monthly payments for principal and interest stay the same. This stability makes budgeting easier and protects you from market rate fluctuations. Common terms are 15, 20, or 30 years. |
| Home Equity Line of Credit (HELOC) | A flexible loan that allows you to borrow money against your home’s equity as needed, up to a certain limit. You can withdraw funds, pay them back, and borrow again, similar to a credit card, typically at a variable interest rate. |
| Home Equity Loan | A flexible loan that allows you to borrow money against your home’s equity as needed, up to a certain limit. You can withdraw funds, pay them back, and borrow again, similar to a credit card, typically at a variable interest rate. |
| Interactive Teller Machine (ITM) | An ATM-like interface with a video screen that connects you to a human representative, allowing you to conduct teller transactions via video without entering a branch. |
| Interest | 1) A percentage of your balance earned on deposits by your bank or credit union. 2) A pre-set charge on a loan. |
| Invest | The act of allocating money towards a business or product with the expectation of growth. Investing carries risks; you may gain or lose money. |
| Loan | A sum of money borrowed from a financial institution with the expectation of repayment within a specified time frame, including interest. |
| Money Market Savings Account | A type of savings account with tiered interest rates that increase with larger balances. The more you save, the higher your interest rate. |
| Overdrawn | Attempting to use funds that are not available in your account. |
| Primary Share Account | Also known as a savings account. This account allows for deposits and withdrawals, intended primarily for saving money. |
| Refinance | Replacing an existing loan with a new one, often to get better terms like a lower interest rate, reduce monthly payments, or change the loan duration. |
| Secured Credit Card | A type of credit card that requires a deposit as collateral, which becomes your credit line. If you fail to repay debts, the institution retains your deposit. |
| Share Certificate | Also known as a Certificate of Deposit (CD), this account requires you to commit your funds for a specified period to earn higher interest than a regular savings account. Early withdrawal is typically not permitted. |
| Statement | A record of all transactions in an account, available in physical or electronic format. |
| Transaction | Any exchange of money, including purchases, withdrawals, or transfers. |
| Transfer | The act of moving money between accounts, which can occur within a single institution or across multiple financial institutions. |
| Withdraw | The act of taking money out of an account. |