Financial Glossary

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  • Annual Fee
    A flat, yearly charge similar to a membership fee that allows you to keep your credit card active.
  • Annual Percentage Rate / APR
    A measure of the cost of credit expressed as a yearly interest rate. Many credit card plans charge different APRs for credit used in different ways – for example, one APR for purchases, another for cash advances, and still another for balance transfers. Some plans may increase the APR if a payment is late. For a variable-rate credit card plan, the interest rate is explicitly tied to another rate, such as the Prime Rate or the Treasury Bill rate. If the other rate changes, the APR on your card will, too. The APR on fixed-rate credit card plans, though not explicitly tied to changes in other interest rates, can also change over time. The card issuer must notify you before the “fixed” interest rate is changed. A tiered APR means that different rates apply to different levels of the outstanding balance (for example, 16% on balances of $1 - $500; 17% on balances above $500).
  • ATM / Automated Teller Machines
    Otherwise known as money machines or cash machines. These machines allow you to access funds from your account even when your bank is not open.
  • ATM Card
    A magnetically encoded plastic card that enables a customer to perform routine banking transactions such as withdrawal and deposit of funds, transfer of funds between accounts, and the payment of certain obligations through a special device commonly known as an automated teller machine. This card can provide the cardholder with access to their money 24 hours a day, 7 days a week.
  • Automated Banking
    A term used to describe various technology-based products and services that enable customers to access their accounts around the clock and complete transactions via computer, telephone, mobile phone, and automated machine, which were previously handled through a bank teller at a financial institution. Such services include online and mobile banking, bill payment services, and electronic transfers. More applications are continually conceived.
  • Balance
    The amount of money you have in your account.
  • Bank
    A business that keeps money safe for people, makes loans, and provides other services.
  • Borrower
    An individual who receives funds in the form of a loan with an obligation to repay the principal with interest.
  • Budget
    An estimate, often itemized, of expected income and expense for a given period in the future.
  • Cash Advance Fee
    A fee charged if you obtain a cash advance. This fee is in addition to the interest rate charged on the amount of the advance, which is often higher than the interest rate for purchases.
  • Cent
    Another word for penny.
  • Certificate of Deposit / CD
    A type of savings vehicle that requires you to invest your money for a certain length of time and guarantees the same rate of return (interest) for that entire time. CDs usually require a minimum deposit, and they pay an interest rate slightly higher than a savings account. If you withdraw your money early, you pay a penalty.
  • Check Card
    Plastic card similar to a credit card, but draws funds directly from a checking account. Also known as a debit card.
  • Check
    A written contract between you and your bank. It notifies the bank to take the stated amount of money from your account and give it to someone named on the check.
  • Checkbook Register
    Used by the account holder to record all activity involving the account (such as, checks written, deposits, ATM withdrawals, check card purchases). When accurately maintained, the checkbook register will be one of the best methods of tracking the account’s balance.
  • Checking Account
    A bank account from which money may be withdrawn by writing a check or using a debit or ATM card.
  • Co-signer
    Someone who signs a credit agreement along with the borrower who does not receive goods, services or money in return for the obligation. The co-signer is legally obligated to assume responsibility for loan repayment if the borrower doesn’t.
  • Coins
    Pennies, nickels, dimes, quarters, and halfdollars.
  • Collateral
    Anything of value (asset) pledged to a lender until a loan is repaid. Can be seized if the loan is not paid.
  • Compound Interest
    Compound interest occurs when interest is earned on your original investment plus on the interest already earned on that account.
  • Consumption
    The purchase or use of a product or service by a consumer.
  • Cost
    (1) An amount paid or required in payment for a purchase; a price. (2) The expenditure of something, such as time or labor, necessary for the attainment of a goal.
  • Credit Bureau
    An agency that gathers and maintains information on the debts and repayment records of individuals and businesses.
  • Credit Card
    Basically a loan from a financial institution. A pre-determined credit limit is assigned, and you can pay back whatever you charge either in full or in monthly installments. If you don’t pay back the entire purchase amount owed each month, you’ll owe interest on the outstanding balance.
  • Credit Report
    A report that provides information on where an individual works and lives, how they pay their bills, and how much money they owe to others.
  • Credit Score
    A statistically derived numeric expression of a person’s creditworthiness that is used by lenders to assess the likelihood that a person will repay a debt. The score is based on the information in a person’s credit report.
  • Credit
    The right or ability to buy something now and pay for it later. You make a promise to pay back the money you borrowed plus some extra, called interest. The extra amount is part of the cost of borrowing money.
  • Debit Card
    A plastic card that enables the cardholder to purchase goods or services, or withdraw cash, the cost of which is immediately deducted from their bank account. This card can also be used to activate point-of-sale terminals in supermarkets, gas stations, and stores.
  • Debit
    Any withdrawal or transaction that removes money from your account.
  • Delayed Gratification
    The ability to put off doing something now, in order to obtain something you want in the future.
  • Deposit
    A transaction which adds money into your account.
  • Dime
    A small silver coin worth ten cents.
  • Direct Deposit
    Payroll, government or other regularly scheduled deposits made electronically to your account.
  • Discretionary Income
    The amount of income left to an individual after taxes and other monetary obligations are paid. Discretionary income is generally deposited into a savings account or used for additional spending by the individual.
  • Dollar
    The official currency of the United States.
  • Earning
    The income received from work or services performed by an individual or business.
  • Emergency Fund
    An easily accessible stash of money set aside for use only in sudden, urgent situations, such as the loss of a job, a medical need, or major expense. The purpose of such a fund is to improve financial security by creating a safety net to meet expenses in a time of crisis.
  • Finance Charge
    The dollar amount you pay to use credit. This charge is the sum of the interest charges, cash advance fees, etc. accumulated during a billing cycle. Besides interest costs, the finance charge may include other charges such as cash-advance fees.
  • Financial Plan
    A written approach created to achieve monetary goals—with strategies for reaching short-term objectives (those within one year) and longterm targets (things to attain within five or more years).
  • Fixed Interest Rate
    An interest rate that does not change during the entire term or life of the loan.
  • Goal Setting
    The act of establishing an objective toward which you will work and a plan to get there, such as saving for a special future purchase.
  • Grace Period
    A period of time, often about 25 days, during which you can pay your credit card bill without incurring a finance charge. Under nearly all credit card plans, the grace period applies only if you pay your balance in full each month. It does not apply if you carry a balance forward from month-to-month. Also, the grace period usually does not apply to cash advances, which may begin accruing interest from the day of the transaction.
  • Gross Monthly Income
    The total monthly income earned before taxes and any benefit deductions.
  • Impulse Purchase
    Spontaneous, rather than premeditated, acquisition of something, considered by some to be prompted by strategic product placement in retail locations such as candy and magazines in the grocery checkout lines.
  • Income
    The total amount of money you earn from employment and other sources.
  • Insufficient Funds/Non-sufficient Funds (NSF)
    An attempted withdrawal returned unpaid when you don’t have enough available funds in your account to pay the withdrawal. Your bank will typically charge you a fee for insufficient funds.
  • Interest Rate
    The percentage of an amount of money that is borrowed and is paid for during a specific period of time specified in the terms of the loan. The usual way of calculating interest — as a percentage of the sum borrowed.
  • Interest-bearing Checking Account
    A type of checking account that generates interest income on the available balance in the account. Minimum balance requirements are usually higher for this type of account, and there are often fees charged when the account balance drops below the minimum balance required. Due to the liquidity of a checking account, the interest rate earned is typically lower than Certificates of Deposit and even regular savings accounts.
  • Interest
    The resulting amount of money credited to an account holder’s account based upon a designated percent rate set by the financial institution.
  • Internet Banking / Online banking
    Online tool for managing your bank account; typically allows you to transfer funds, check balances, complete customer service requests, and more.
  • Internet Bill Payment / Online Bill Payment
    Online tool for paying bills.
  • Investing
    Purchasing a stock, bond, or other asset; the act of committing money or capital in order to gain a financial return.
  • Investments
    Assets acquired in order to earn income in the form of interest, dividends, or capital gains.
  • Late-Payment Charge
    A charge imposed when your payment is late. If your payment arrives after the grace period or due date, you may be charged both a finance charge (the interest on your outstanding balance) and a late-payment charge. Some card issuers may also impose a penalty rate if you have more than one late payment within several months.
  • Loan Balance
    The outstanding balance of a loan not paid in full, excluding any accrued interest.
  • Loan Deposit
    A sum of money (earnest money) given by the borrower to secure a loan.
  • Loan Term
    The total number of payments required to pay the loan in full. This is also known as an amortization term.
  • Loan
    Money you borrow and then pay back in installments over a set period of time.
  • Market Account
    A savings account that offers more competitive rate of interest in exchange for larger than normal deposits and a certain balance; account features may include a restriction on the amount of transactions made during a specific period. Frequently called a money market account, money market demand account, or money market deposit account.
  • Maturity
    The termination or due date on which final payment of a loan must be paid in full.
  • Money
    Legal tender; the coin and currency declared by a government as the accepted medium of exchange.
  • Nickel
    A silver coin worth five cents.
  • Online Statements
    Electronic copy of your account statement that can be viewed online; replaces a paper statement delivered via the mail.
  • Opportunity Cost
    What is given up when making a choice.
  • Over-the-Limit Fee
    A fee imposed when your charges exceed the credit limit set on your card.
  • Overdraft
    When a withdrawal or purchase causes your account’s available balance to go below zero. Your bank will typically charge you a fee to cover an overdraft.
  • Paycheck
    A check by which you are paid for your work.
  • Payday
    The day on which you collect wages earned or a paycheck is distributed.
  • Payee
    Name of the person or business to whom you write a check or make an online bill payment.
  • Penalty Rate
    The rate that applies under specific circumstances set out by the card issuer. For example, if you make 2 late payments within 6 months, a card issuer may have a policy of raising the APR.
  • Penny
    A copper colored coin worth one cent.
  • Periodic Rate
    The rate you are charged each billing period. For some credit card plans, the periodic rate is a monthly rate, calculated by dividing the APR by 12. For example, a credit card with an 18% APR has a monthly periodic rate of 1.5%.
  • PIN / Personal Identification Number
    Your ATM or check card passcode; can also be used for PIN-based transactions at retailers.
  • PIN-based transaction
    Check card transaction that requires you to enter your PIN to be completed.
  • POS / point of sale terminal
    Machine used at retailers that allows you to complete PIN-based check card transactions by selecting “debit” and entering your PIN.
  • Post-dating
    Dating a check ahead of the day you wrote it.
  • Principal
    The amount of money you are borrowing on a loan or the original amount of money invested, not including interest.
  • Purchase
    Paying for an item or a service.
  • Quarter
    A silver coin, larger than a nickel, that is worth 25 cents.
  • Risk
    The chance a loss will be sustained in a loan or investment, or other transaction. The likelihood you will lose money on an investment.
  • Rule of 72
    A math formula that determines the number of years it will take to double your money at a given interest rate. [Formula: 72 ÷ interest rate = number of years to double money.] For example, if the rate of return on your savings is 4%, you divide 72 by 4 and get 18 (72 ÷ 4 = 18). So, if you invest $2,000 at 4%, it will take 18 years to grow to $4,000. The same amount of money invested at a 12% rate of return will double in 6 years (72 ÷ 12 = 6).
  • Saving
    Keeping your money for a future use instead of spending it. Saving is the opposite of spending.
  • Savings Account
    An interest-bearing account used for safekeeping and accumulating funds. Banks use the money deposited by savers to make loans, so they pay the saver interest for the use of their money.
  • Savings Goals
    A set of monetary objectives toward which you are working. These can be short-term or long-term targets. Financial experts agree that developing a clearly defined goal, writing out a plan to reach it, and measuring progress along the way will help you achieve your aim.
  • Service Fee
    Cost associated with non-routine checking account transactions, such as overdrafts, PIN-based transactions, etc. Service fees vary by financial institution.
  • Signature-based Transaction
    Check card transaction that requires your signature to be completed.
  • Simple Interest
    Simple interest allows you to earn interest only on your original investment, or principal.
  • Skimming
    An electronic method of capturing someone’s personal information employed by identity.
  • Social Security Card
    A blue paper card containing your name and a unique, nine-digit number that stays with you for a lifetime. Your Social Security Number is yours and yours alone. It does not change, no matter how often you move, change occupations or even change your name.
  • Spending
    Using your money to buy things you want or need.
  • Value
    The worth or importance of something.
  • Worth
    The value of a thing or person.
These materials are intended for education purposes only. Any opinions expressed in these materials are not necessarily those of U.S. Bancorp and its affiliates. If legal, financial, tax or other expert advice is required, the services of a qualified professional should be sought.
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