You & Your Money



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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