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Personal Financing

Glossary of terms

Making Sense of Dollars and Cents.

It's hard to make sense of the difference between APR and APY. Below is a simple guide to some common financial terms. 

 

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  • Adjustable Rate Loan (also known as a variable rate loan)

    May offer a lower initial interest rate than a fixed rate loan. The interest rate fluctuates over the term of the loan based on market conditions, but normally stays within the minimum and maximum allowable rates set by the loan agreement. When the rate rises, either the payment amount or the term may increase; and when it falls, either the payment amount or term may decrease.

  • Amortization

    Paying back a loan in a series of installments over time.

  • Annuities

    An annuity is a contract usually issued by an insurance company. They are generally composed of two stages:
    1. The accumulation period, during which the contract builds cash value and money is added.
    2. The payout period, when the funds are distributed.
    Annuities offer tax deferral during the accumulation phase, flexible payment options, and guaranteed death benefits. There are numerous options available as to how an annuity is structured.

  • Appraisal

    An expert or official determination of the value of a home, car, jewelry or any other valuable.

  • APR (annual percentage rate)

    A measure of the cost of credit that expresses the finance charge, which includes interest and may also include other charges, as a yearly rate.

  • APY (annual percentage yield)

    The amount of compounded interest earned on an account after one year.

  • ATM Surcharge

    A fee charged by the owner of an ATM for use by non-customers.

  • Average Daily Balance

    Determined by adding together each day in the month's ending balance and dividing by the number of days in that month.

  • Balloon Note

    A loan that has a regular payment followed by a lump sum payment due at maturity, rather than being paid in equal installments.

  • Bankruptcy

    Occurs when a debtor is judged legally insolvent, either because he petitions the court for discharge of his debts or because his creditors force him to. The debtor's remaining property then comes under the administration of the bankruptcy court.

  • Borrowing

    To receive something on loan, by promising to return it or its equivalent.

  • Certificates of Deposit (also known as Term Share Certificates)

    A fixed term investment account that may be federally insured.

  • Closing Costs (also known as Transaction or Settlement costs)

    The costs to close a loan, especially a real estate loan. They may include: application fees; title examination, abstract of title, title insurance, property survey fees; fees for preparing deeds, mortgages, and settlement documents; attorney's fees; recording fees; notary, appraisal, and credit report fees.

  • Collateral

    Property pledged to secure a loan.

  • Conventional Loans

    Mortgage Loans not insured by government agencies like the Federal Housing Administration (FHA) or Veterans Administration (VA).

  • Creditor

    The person or entity to which money is owed.

  • Creditworthiness

    A reputation for financial solvency and integrity, which entitles a person to be trusted by lenders when borrowing or buying.

Your savings federaly insured to at least $250,000 and backed by the full faith and credit of the United States Government: NCUA, Equal Housing Lender, ESI