Glossary of Financial Terms

A

Account Balance
The amount of money in an account at a specific time, including all deposits and withdrawals posted the previous night, whether or not the funds have been collected.

Account Statement
A printed or online statement of all the funds paid out by or paid into your account during a statement cycle.

Annual Percentage Yield (APY)
The total amount of interest paid by the credit union on your deposit account (checking, savings, Saving Certificates, IRAs) during the year. Includes both interest paid on the amount held in the account, as well as compounded interest for the year.

Automated Clearing House (ACH)
A nationwide funds transfer network that enables participating financial institutions to electronically credit, debit and settle entries to accounts.

Automatic Funds Transfer
An arrangement that automatically moves funds from your account to another on a date you choose; for example, every payday.

Automatic Payment
An arrangement that automatically deducts funds from your account (usually a checking account) on the day you choose in order to pay a recurring bill (such as car, insurance, mortgage payments, etc.)

Available Balance
The amount of money in your account that is available for immediate use.

B

Bill Pay
An optional service that lets you pay your bills online.

Bounced Check
A check that is returned to the depositor because there are not sufficient funds in the account to pay the amount of the check.

C

Canceled Check
A check that has been paid. A canceled check is usually acceptable as legal proof of payment.

Cashier’s Check
A check issued by a financial institution and paid from its funds. A cashier’s check will not usually bounce because the amount it is written for is paid to the credit union when it is issued, and then assumes the obligation.

Checking Account
A type of deposit account that enables account holders to deposit funds and withdraw available funds on demand, typically by writing a check or using a debit card. These accounts are sometimes interest-bearing.

Check Image
A feature that provides images of checks. Each account statement includes images of checks (up to 10 per page) that posted to the account during the statement cycle. Check images can also be viewed within an institution’s Online Banking service. You can also request copies directly from the institution.

Collected Balance
The balance in a deposit account, not including items that have not yet been paid or collected.

Combined Balance
The total funds in all of your linked accounts, such as savings, checking, and certificates.

Compound Interest
Interest that is calculated on both the accumulated interest and the principal balance in the account. The more frequently interest is compounded, the higher the effective yield.

Credit
The increase in a deposit account balance that occurs when a deposit is made to the account.

Credit Card
A card issued to an individual that allows that person to use credit to purchase goods and services. A credit limit is established for each card holder.

Credit Score
A numerical rating representing the creditworthiness of an individual. A credit score is based on analysis of someone’s credit history and current financial circumstances.

D

Debit
A decrease in a deposit account’s balance, such as occurs when a check posted to the account.

Debit Card
A card that deducts money directly from a checking account to pay for goods or services. A debit card can also be used at ATMs to access an account, including withdrawing cash.

Deposit
Money added into any account.

Digital Wallet
You can use the credit and debit cards stored in your digital wallet to make purchases at participating merchants.

Direct Deposit
A service that automatically transfers recurring deposits into your checking, savings, or into your deposit account. Deposits can include salary, pension, Social Security and Supplemental Security Income (SSI) benefits, or other regular monthly income.

Disclosure
Information about an account’s services, fees and regulatory requirements.

E

Electronic Funds Transfer (EFT)
Any transfer of funds initiated by electronic means from a terminal, telephone, computer, or ATM.

EMV/Chip Card
A standard card that contains an embedded microchip as well as a traditional magnetic stripe. The chip encrypts information to increase data security when making transactions at terminals or ATMs that are chip-enabled.

F

Fee
A charge for various services and transactions.

Financial Institution
An entity that collects funds from the public and other institutions, and invests those funds in financial assets. Financial institutions are differentiated by the way they obtain and invest funds.

Float
The time between the date when a check or payment is deposited to an account and the date the funds become available.

G

Garnishment/Garnish
A legal process that allows a creditor to remove funds from your account to satisfy a debt that you have not paid. If you owe money to a person or company, they can obtain a court order directing your financial institution to take money out of your account to pay off your debt. Most Financial Institutions will notify you via mail or phone call if you have a garnishment on your account

Gross Pay
The total amount of money an employee earns before taxes and other deductions are taken out.

Guarantor
A party who agrees to be responsible for the payment of another party’s debts should that party default.

H

Hold
Used to indicate that a certain amount of an individual’s balance may not be withdrawn until an item has been collected, or until a specific check or debit is posted, or until a certain time period has passed.

Home Equity Loan
A home equity loan allows you to tap into your home’s built-up equity, which is the difference between the amount that your home could be sold for and the amount that you still owe.

I

Inactive Account
An account in which there have not been any transactions for an extended period of time. In some cases, when there has been no activity in the account within a period specified by state law (generally at least 3 years), the law requires the financial institution to turn the account over to the state as unclaimed property.

Indemnity
A legal obligation, a contract, to compensate for any damages or losses. A letter of indemnity guarantees contractual provisions will be met; otherwise, financial reparations will be made.

Interest-Bearing Account
An account that earns interest.

Interest Rate
The percentage of interest paid on an interest-bearing account, such as savings, certificates, and some checking accounts; also, the percentage charged on a loan or line of credit. Different types of accounts and loans pay or charge different rates of interest.

IRA
An Individual Retirement Account (IRA) is an account that provides either a tax-deferred or tax-free way for you to save for retirement. There are many different types of IRAs but Roth and Traditional IRAs are the most common. Within an IRA, some people invest in mutual funds or stocks, while others may choose products such as Saving Certificates and money market savings accounts. Each IRA has certain eligibility requirements and unique features.

J

Joint Account
An account owned by 2 or more people.

Jumbo Loan
A mortgage that exceeds the borrowing limit for regular mortgages

L

Late Charge
The fee charged for delinquent payment on an installment loan, usually expressed as a percentage of the loan balance or payment. Also, a penalty imposed by a card issuer against a cardholder’s account for failing to make minimum payments.

Lender
An individual or financial institution that lends money with the expectation that the money will be returned with interest.

Lien
Legal claim against a property. Once the property is sold, the lien holder is then paid the amount that is owed.

Line of Credit
A pre-approved loan authorization with a specific borrowing limit based on creditworthiness. A line of credit allows borrowers to obtain a number of loans without re-applying each time as long as the total of borrowed funds does not exceed the credit limit.

Linked Account
Any account linked to another account at the same financial institution so that funds can be transferred electronically between accounts. In some cases, the combined balance of all linked accounts may determine whether monthly service and other fees are applied to the account.

M

Maturity Date
The date that a Savings Certificate term ends, your financial institution stops paying the agreed-upon interest and you can choose to take the money deposited or renew the term.

Minimum Balance
The amount of money required to be on deposit in an account to qualify the depositor for special services or to waive a service charge.

Minimum Payment
The minimum dollar amount that must be paid each month on a loan, line of credit, or other debt.

Money Order
A financial instrument, issued by a financial institution, allowing the individual named on the order to receive a specified amount of cash on demand. Often used by people who do not have checking accounts. U.S. Post Office, or some supermarket and convenient store locations often have these available to purchase.

Monthly Fee
The fee charged to maintain a particular account, such as a checking or savings account.

N

National Credit Union Administration (NCUA)
The Federal regulatory agency that charters and supervises Federal credit unions. (NCUA also administers the National Credit Union Share Insurance Fund, which insures the deposits of Federal credit unions.)

Negotiable Instruments
A signed document that promises to pay a specific amount of money to a named person such as checks, money orders, promissory notes, certificates, and traveler’s checks

Net Pay
The amount of money an employee receives after taxes and other deductions are subtracted from their gross pay.

Non-CCCU/CO-OP Network ATM
An ATM or cash machine that provides ATM cardholders with access to their accounts, but is owned and operated by an independent bank or financial institution. Fees generally apply to cash withdrawals but balance inquiries are free.

Non-Negotiable Checks
Checks that cannot be exchanged for cash and are for informational purposes only. They are often given to employees whose paychecks are automatically deposited.

O

Online Banking
A service that allows an account holder to obtain account information and manage certain banking transactions through a personal computer via the financial institution’s website or a cell phone with certain system requirements.

On-Us Items
Checks or drafts drawn on the same financial institution that is used by the payee to cash the check or deposit the proceeds. Checks or drafts payable to the drawor’s institution itself, as opposed to checks drawn on other institutions.

Outstanding Check
A check written by a depositor that has not yet been presented for payment to or paid by the depositor’s financial institution.

Overdraft
When the amount of money withdrawn from an account is greater than the amount actually available in the account, the excess is known as an overdraft, and the account is said to be overdrawn.

Overdraw
Debits to an account that exceed the available balance.

P

Passbook
A book in ledger form in which are recorded all deposits, withdrawals, and earnings of a customer’s savings account.

Past Due Item
Any note or other time instrument of indebtedness that has not been paid by the due date.

Payee
The person or organization to whom a check, draft, or note is made payable.

Payment
The transfer of money or other value from one party to another. Payments can be made in cash or noncash form.

Periodic Rate
The interest rate described in relation to a specific amount of time. The monthly periodic rate, for example, is the cost of credit per month; the daily periodic rate is the cost of credit per day.

Personal Identification Number (PIN)
Generally a four-character number or word, the PIN is the secret code given to credit or debit cardholders enabling them to access their accounts. The code is either randomly assigned by the financial institution or selected by the customer. It is intended to prevent unauthorized use of the card while accessing a financial service terminal.

Phishing
The activity of defrauding an online account holder of financial information by posing as a legitimate entity.

Power of Attorney
A written instrument which authorizes one person to act as another’s agent or attorney. The power of attorney may be for a definite, specific act, or it may be general in nature. The terms of the written power of attorney may specify when it will expire. If not, the power of attorney usually expires when the person granting it dies.

Prepayment
The payment of a debt before it actually becomes due.

Principal Balance
The outstanding balance on a loan, excluding interest and fees.

R

Rate
The cost of debt service paid by a borrower or issuer to a lender or investor.

Real Estate
Property, land, buildings, and structures

Reconciliation
The process of analyzing two related records and, if differences exist between them, finding the cause and bringing the two records into agreement. Example: Comparing an up-to-date check book with a monthly statement from the financial institution holding the account.

Refinancing
A way of obtaining a better interest rate, lower monthly payments, or borrow cash on the equity in a property that has built up on a loan.

Refund
An amount paid back because of an overpayment or because of the return of an item previously sold.

Regulation E
A set of rules that protects consumers from electronic fund transfers (EFTs) and remittance transfers.

Repossession
When a lender takes back a debtor’s property that was used as collateral for a loan. This happens when the debtor defaults on the loan and fails to make payments.

Renewal
A form of extending an unpaid loan in which the borrower’s remaining unpaid loan balance is carried over (renewed) into a new loan at the beginning of the next financing period.

Residual Interest
Interest that continues to accrue on your credit card balance from the statement cycle date until your payment is received.

Return Item
A negotiable instrument—principally a check—that has been sent to one financial institution for collection and payment and is returned unpaid by the sending financial institution.

Routing Number
A unique nine-digit number that identifies a bank or credit union. It’s used to process transactions like direct deposits, bill payments, and electronic checks.

S

Safe (or Safety) Deposit Box
A type of safe usually located in groups inside an institution’s vault and rented to individuals for their use in storing valuable items.

Savings Account
An account that allows you to deposit money and earn interest. Savings accounts are a good way to save money for longer-term use, like for emergencies or future goals.

Savings Certificate
A federally insured savings account with a fixed dividend rate and a fixed date of maturity. The dividend rates of these accounts tend to be higher than those on savings accounts and some high-yield accounts.

Service Charge
A charge assessed by an institution for processing transactions and maintaining accounts.

Signature Card
A card signed by every member which may be used as a means of identification. The signature card represents a contract between a financial institution and the depositor.

Statement
A summary of all transactions that occurred over the preceding month and could be associated with a deposit account or a credit card account.

Stop Payment
An order not to pay a check that has been issued but not yet cashed. If requested soon enough, the check will not be debited from the payer’s account. There may be a fee for this service.

Student Loan
Loans made, insured, or guaranteed under any program authorized by the Higher Education Act. Loan funds are used by the borrower for education purposes.

Single-Payment Loan
A closed-end loan that does not require periodic principal payments. Instead, the full amount is due at maturity.

T

Terms
The period of time and the interest rate arranged between creditor and debtor to repay a loan.

Transaction
Any money that moves in or out of your account. Types of transactions include cash withdrawals or deposits, checks, online payments, debit card charges, wire transfers, and loan payments.

Transfer
The movement of funds from one account to another.

Traveler’s Check
Check issued by a financial institution that functions as cash, but is protected against loss or theft.

Treasury Bonds
Long-term obligations issued by the U.S. Treasury. Bonds are issued for initial maturities greater than ten years.

Trust Account
A general term that covers all types of accounts in a trust department, such as estates, guardianships, and agencies. A trust account is a legal arrangement in which the grantor allows a third party, the trustee, to manage assets on behalf of the beneficiaries of the trust.

Truth in Lending Act (TILA)
The Truth in Lending Act is a Federal law that requires lenders to provide standardized information so that borrowers can compare loan terms. In general, lenders must provide information on what credit will cost the borrowers, when charges will be imposed, and what the borrower’s rights are as a consumer.