You & Your Money - Virginia Guilford
You and Your Money Glossary
|401k |A special type of retirement savings account offered by employers. |
|ACH Withdrawal/ACH Debit |An ACH withdrawal or ACH Debit is an automated payment that comes directly out of your |
| |checking account. Many people use this method to make their insurance premium payments, |
| |mortgage payments, car payments, or tax payments. This type of withdrawal should only be used|
| |for the most trustworthy companies. ACH stands for “Automated Clearing House”. |
|Adjustable Rate |An interest rate that is not fixed and changes over the life of the loan. Similar to |
| |‘variable rate’. |
|APR |The APR (Annual Percentage Rate) is the interest rate that you'll be charged on any balance |
| |you still owe on your credit card. This is also sometimes called the "finance charge". |
|ARM |An ARM (Adjustable Rate Mortgage) has an interest rate that changes during the term of the |
| |mortgage. |
|ATM |An ATM (Automated Teller Machine) is a machine that allows you to access your bank account – |
| |to check your balance, withdraw cash, make deposits, pay bills, and transfer money – without |
| |needing to be at the teller window in the bank. |
|Bank |A bank is a financial institution that accepts deposits from customers and lends the money to|
| |businesses and other consumers. |
|Bankruptcy |Bankruptcy is the legal process in which a person or company declares that they cannot pay |
| |their debts. Almost everything the person owns is sold and the money is shared out among |
| |their creditors (people they owe money to). Then the person no longer owes anything – their |
| |debts have been discharged (paid off), even if the creditors only received a percentage of |
| |what they were owed. Some kinds of debt, like student loan debt, cannot be discharged through|
| |bankruptcy. |
|Balance |The amount of money in an account at a particular time or the amount that remains to be paid |
| |on a credit card. |
|Benefits |Valuable things that you get from your employer in addition to the money that is your salary.|
| |These might include health insurance, life insurance, free meals, the employer’s part of the |
| |social security payments that you owe, store discounts, etc. |
|Bounced Check |A check is said to ‘bounce’ when there is not enough money in that account to pay the amount |
| |that the check is written for. |
|Brokerage Firm |A brokerage firm is a financial institution that charges a fee to help its customers buy and |
| |sell securities (stocks, bonds, mutual funds). |
|Business Day |A ‘business day’ is a day that a business is open. This term is often used when talking about|
| |how soon a company will respond or when it will do something. The company might say something|
| |like “You will be paid on the first day of the month, or the next business day after” or “You|
| |will receive your shipment within 4 business days”. Usually, businesses are open only during |
| |the week, which means that the ‘business days’ are Monday, Tuesday, Wednesday, Thursday, and |
| |Friday. In the first example, if the first of the month is on a Saturday, you won’t receive |
| |your pay until the next Monday – because Saturday and Sunday are not ‘business days’. In the |
| |second example, if you ordered on Wednesday, the product will be shipped on the following |
| |Tuesday – which is 6 days later, but only 4 business days, because Saturday and Sunday are |
| |not counted. |
|Cash-Back |A Cash-Back credit card is one which gives a small percentage of the total amount you charge |
| |as a refund to you. |
|CD |Certificate of Deposit – a CD is a way to save money and gain a higher rate of interest than |
| |with a savings account by agreeing to not withdraw the money for a fixed time period. The end|
| |of that fixed time period is called the CD’s maturity date. |
|Certified Check |A certified check is a check that is guaranteed by the bank to be good – they promise the |
| |payee that it was written by an authorized person and that the check won't bounce. |
|Check Cashing Store |A for-profit company that has a store-front business that charges a small fee to cash checks.|
| |Usually they only cash checks that are government checks (welfare checks, tax refund checks),|
| |but they may sometimes be willing to cash a paycheck from a large local employer. |
|Checking Account |A bank account that provides paper checks that you can use to transfer money from your |
| |account to pay your bills or give money to other people. Usually checking accounts do not pay|
| |interest on the money that is in the account, although some do. Banks may charge for checking|
| |accounts – either with a charge for each check you write, or a monthly charge. Sometimes this|
| |fee is waived (not charged) if you keep a certain amount of money in your account. |
|Clearing House |A bank ‘clearing house’ is a central place where banks move money in and out of different |
| |people’s bank accounts, based checks and other instructions. |
|Collateral |Something of value that is used to guarantee that you will repay a loan. Sometimes called |
| |‘security’. For example, if you get a loan to buy a car, the car you buy is the collateral |
| |for the financing company that gives you the loan. If you don’t pay back the loan, the |
| |finance company can repossess (take back) the car. |
|Comp Time |‘Compensatory Time Off’ or ‘comp time’ is sometimes awarded to employees who work overtime |
| |hours, but are not paid for the extra time. Comp time is usually an amount of paid time off |
| |that is the same as, or similar to, the amount overtime hours worked. |
|Competitive Rates |This is a term often used by lenders when they don’t want to say exactly what their rates |
| |are, but they want to suggest that their rates are about the same, or maybe a little more, or|
| |maybe a little less, than all the other lenders. |
|Contractor |An independent contractor (or freelance worker) is a person who is not an employee, and does |
| |not have the protection under state and federal laws that an employee has. An independent |
| |contractor is selling his or her services to the company where he works. Working as an |
| |independent contractor is like running your own business – you may decide to incorporate and |
| |become a legal business entity; you will pay your own taxes; and if you want health insurance|
| |or life insurance or retirement savings, you will purchase them yourself. |
|Credible Information |Believable, accurate, or trustworthy. |
|Credit History |Your credit history is made up of all your past and current credit cards, mortgages, auto |
| |loans, and other loans, along with information about whether you always paid on time and the |
| |full amount. People with a limited credit history may need to pay a higher interest rate for|
| |any loans, because they have not yet proven that they are a good risk. |
|Credit Score |A credit score is a number that helps lenders determine how likely you are to make your |
| |payments on time. It is a summary of your credit history. |
|Credit Union |A nonprofit financial cooperative that offers deposit accounts, low-interest loans, & other |
| |banking services. |
|Default |If you fail to make the payments on a loan, you are ‘in default’. |
|Deposit |Deposit (verb) is the action of putting money into an account– like a savings account or |
| |checking account or brokerage account. Deposit (noun) is the money you put in. |
|Direct Deposit |A direct deposit is a deposit, usually from an employer or the government, which goes |
| |directly in to your bank account with no action on your part. You don’t need to go to the |
| |bank or ATM, and you don’t need to fill out a deposit slip. |
|Disability Insurance |Insurance that will pay all or part of your salary in case you are unable to work because you|
| |are very sick or disabled. |
|Disinterested Advice |Not having an interest in the outcome at all. For example, if a salesperson gives you advice,|
| |the advice is ‘disinterested’ only if he will not gain or lose no matter whether you take his|
| |advice or not. |
|Distribution |Money that is given to you from an account according to a formula – like a certain percentage|
| |every year, or a certain dollar amount every month. It is a little bit different from a |
| |regular withdrawal, because it is planned ahead of time, rather than being an ‘on demand’ |
| |request. |
|Down Payment |When you making a big purchase, like buying a house – sometimes you pay a portion of the cost|
| |in cash, and borrow the rest. The amount you pay in cash is called the ‘down payment’. The |
| |‘down payment’ proves to the bank that you are a trustworthy person who is capable of saving |
| |money. |
|Downsizing |When an employer reduces the number of employees in order to adjust to changing market |
| |conditions, such as lower sales or lower profits. When employees are let go (fired) because |
| |of ‘downsizing’, it is understood that they did not do anything wrong at work – it is just |
| |that the employer needed to have fewer employees. |
|Employee |The person who does the work; a special kind of worker protected by state and federal |
| |regulations. |
|Employer |The person or company that the employee works for. |
|Endorse |When used in reference to a check, ‘endorse’ means to sign the check on the back to indicate |
| |that you are authorizing it to be cashed, usually in order for it to be deposited in your |
| |bank account. |
|FDIC |FDIC (Federal Deposit Insurance Corporation) is a government agency that insures bank |
| |deposits. |
|Federal |Used to describe laws and regulations and taxes that are based on rules created by the US |
| |federal government (the US Senate, the US House of Representatives, or one of the US federal |
| |agencies, like the Internal Revenue Service ), and apply to everyone in all of the states in |
| |the United States. |
|Federal Reserve Banks |The twelve Federal Reserve Banks form the Federal Reserve System, the central banking system |
| |of the United States. The twelve federal reserve banks are located in Boston, New York, |
| |Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St Louis, Minneapolis, Kansas City, |
| |Dallas, and San Francisco. |
|Finance Charge |The finance charge is the interest that you'll be charged on the amount you owe on your |
| |credit card. The term ‘finance charge’ is also sometimes used to refer to a special penalty |
| |fee that is charged if you are late paying your bill. |
|Fixed Rate |The interest rate you pay for a credit card or loan may be variable or fixed. If your |
| |interest rate is variable, then the interest rate you pay will be different at different |
| |times. But if the interest rate is fixed, you will have a certain percentage rate to pay, and|
| |it will remain the same for the life of the mortgage or auto loan, or until notified of a |
| |change by your credit card company. |
|Float |The ‘float’ is a term for the time between the time that you write the check and the time |
| |that the money leaves your bank. |
|Foreclosure |A legal process where the mortgage lender takes back a house or condo or coop because the |
| |mortgage payments were not made. |
|Full Time |A work schedule that is 35, 40, or 45 hours a week. Full-time workers generally receive the |
| |same amount of pay every pay period. |
|Freelance Worker |A freelance worker (or freelancer or independent contractor) is a person who is not an |
| |employee, and does not have the protection under state and federal laws that an employee has.|
| |A freelancer is selling his or her services to the company. Freelance work is like running |
| |your own business – you sell your services to your clients; you pay your own taxes; and if |
| |you want benefits like health insurance or life insurance or retirement savings, you must |
| |purchase them yourself. |
|Grace Period |A ‘grace period’ is an amount of time between when a bill is sent to you and when your |
| |payment is due. |
|Gross Pay |The full amount of your pay before any deductions for taxes and benefits are made. |
|Human Resources (HR)) |Human Resources (HR) is the department in a company that is in charge of hiring and firing |
| |staff, managing their benefits, and tracking their performance. Sometimes, in a smaller |
| |company, there is no formal HR department, but one staff member handles HR work in addition |
| |to other responsibilities. |
|Institution |An organization. The term ‘institution’ is used as a general term for all kinds of |
| |organizations – corporations, holding companies, schools, etc. Each type of organization is |
| |slightly different, so the term institution is used to refer to them all. |
|Internal Revenue Service (IRS) |The Internal Revenue Service (IRS) is the federal tax collecting agency. |
|Introductory Rate |Credit cards or loans or services are often offered at an ‘introductory rate’. This is a |
| |lower-than-normal rate that is given as an incentive to have you sign up with them. It is |
| |only good for a certain amount of time, after which the normal rates apply. |
|IRA |An IRA (Individual Retirement Account) provides a tax-advantaged (either tax-deferred or |
| |tax-free) way of saving for retirement. There are many different types of IRAs, including |
| |traditional IRAs and ROTH IRAs. |
|Maturity |Some investments, like CDs, are done for a specific amount of time – like 3 months, or 6 |
| |months, or 2 years. So, the end date of that specific amount of time is called the ‘maturity |
| |date’, or the CD is said to ‘mature’ on that date. |
|Money Order |A ‘money order’ is paperwork that orders the payment of a specified amount of money. A money |
| |order is usually issued by a bank or post office, and can be redeemed there, too. This is a |
| |safe way that you can use to send money to people, both within the US and in other countries.|
|Nest Egg |A slang term for your savings, usually used for money you are saving for a big purchase, like|
| |a down-payment on a house. You are supposed to look after this money as carefully as a bird |
| |looks after the egg in its nest. |
|Net Pay |The amount you actually receive; your pay check after the deductions for taxes and/or |
| |benefits have been made. |
|Next Business Day |See ‘business day’, above |
|Nut |A slang term for the minimum amount of money you need for your basic expenses. |
|Off the Books |Working ‘off the books’ means that income from this job is not reported to the government for|
| |tax purposes, and no taxes or social security payments are withheld. |
|On Demand |‘On Demand’ means whenever you ask for it. Your savings account will probably allow you to |
| |withdraw your money “on demand”, and that means that you can take out money at any time you |
| |want. If you have money in a CD, that money is not really available ‘on demand’, because you |
| |are supposed to wait until the CD reaches its maturity date. |
|Overdraft |An ‘overdraft’ happens when you write a check for more than the amount of money that is in |
| |your account. This term can also be used when you take out more than you have in your account|
| |by using a debit card, or making an online banking payment. |
|Part-Time |Any work schedule that is less than a regular work week is part-time work. Part-time work can|
| |be a regular schedule (for example, from 9 – 12, Monday through Friday, 15 hours a week), or |
| |it can be irregular, based on the employers need or the worker’s availability. |
|Pay Period |The amount of time between pay days. A pay period for an employee job will typically be |
| |either monthly, twice-monthly, every two weeks, or weekly. Some jobs, like baby-sitting, will|
| |pay you each time you work. |
|Prime Rate. |The ‘Prime Rate’ is generally the rate that banks charge their best and biggest customers. It|
| |is tied to the Federal Funds rate, which is the rate that banks charge each other. The prime |
| |rate in the United States is currently 3.25% |
|Principal |The amount of money borrowed. A loan repayment is made up of both principal payments and |
| |interest payments. |
|Quarter (Q) |The US financial year is divided into quarters, as follows: |
| |First Quarter/Q1 January, February, March |
| |Second Quarter/Q2 April, May, June |
| |Third Quarter/Q3 July, August, September |
| |Fourth Quarter/Q4 October, November, December |
|Repossession |Taking back property that was used as collateral or security for a loan, when the loan is in |
| |default because the payments were not made. |
|Rewards Cards |Rewards cards are credit cards that provide a reward for using them. The reward may be points|
| |that can be used to purchase goods at a particular store or from a catalog, or frequent flier|
| |miles from a particular airline, or the reward may be a percentage of your total charges |
| |refunded to you as “cash back”. |
|Savings Account |A bank account that pays interest. Funds from a savings account are usually taken out at the |
| |branch or at an ATM; they are not usually withdrawn by check. |
|Severance Pay |Severance pay is extra money that an employer gives to an employee to make up for the |
| |employee losing their job. If an employee is let go because of not being able to do the job, |
| |or because of doing something bad at work, usually there will be no severance pay. |
|Social Security |A government plan that collects a percentage of all workers’ wages, and then provides them |
| |with a pension when they are old. |
|State |Used to describe laws and regulations and taxes that are made by the government of one of the|
| |states, These apply only to people living in that particular state. State laws can differ, so|
| |New York and New Jersey may have different state laws and will have different rules about |
| |taxes. |
|Unauthorized |Not approved. This is often used to describe stealing. If a criminal takes money out of your |
| |bank account, it will be described by the bank as an ‘unauthorized transfer’, meaning that |
| |the money was moved from your account to another account without your OK, without your |
| |‘authorization’. |
|Variable Rate |The interest rate you pay for a credit card or loan may be fixed or variable. If the interest|
| |rate is fixed, you will have a certain percentage rate to pay, and it will remain the same |
| |for the life of the loan. But if your interest rate is variable, then the interest rate you |
| |pay will be different at different times. The rate might be raised if you miss a payment, or |
| |charge more than your credit limit. The lender may also say that it will raise or lower the |
| |rate, depending on changes in the “Prime Rate”. |
|Verifiable |Able to be independently proved to be correct. A lender may say that your income needs to be |
| |‘verifiable’. This means that your employer or your bank needs to be able to prove that what |
| |you said is true – you do really have the income that you said you have. |
|Waive, waiver, waived |To ‘waive’ is to give up a claim to something. If the bank says that it will ‘waive’ the |
| |monthly fee for your checking account if you keep a certain amount of money in the account – |
| |this means that although they are entitled to charge you the fee, they are giving up their |
| |claim to that money, if you do what they require. |
|Withdraw, Withdrawal |To withdraw (verb) is to take money out of an account – like a savings account or checking |
| |account or brokerage account. A withdrawal (noun) is the act of taking the money out. |
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