Have you ever watched the news, listened to a podcast, read an article or walked into a credit union and thought what the heck are they talking about? You immediately reach for your phone to look up the definition of the word you just heard. Listed below are several "banking" terms and their definitions. We hope this list is helpful and saves you time from having to hit the search button next time.
Credit Union – nonprofit financial institution that’s owned by the people who use its financial products.
Nonprofit – Not making or conducting primarily to make a profit.
Member: You – when you join a credit union, you become a member, because you are a partial co-owner of the organization and receive profits in the form of lower costs and dividends on interest-bearing accounts.
Deposit – A sum of money placed or kept in a bank account, usually to gain interest.
Withdrawal – The act of taking money out of an account.
CD: Certificate of Deposit- Savings product that earns interest on a lump sum for a fixed period of time.
IRA: Individual Retirement Account – Long term savings account with tax advantages.
APR: Annual Percentage Rate – Cost you pay each year to borrow money, including fees, expressed as a percentage.
APY: Annual Percentage Yield – Rate you earn on an account over a year and it includes compound interest.
Credit score – A three-digit number, usually on a scale of 300 to 850 that rates a consumer’s creditworthiness. The higher the score, the better!
NCUA: National Credit Union Administration – Government- backed insurer of credit unions in the United States.
Balance transfer – process that lets you move debt of a credit card or from a loan to a different credit card. You can combine multiple debts and payments to one card.
Money Management- Account that usually has a minimum balance and a limit to the number of withdrawals you have at one time. They earn interest at a higher rate than a general savings or checking account.
Secured credit card – You pay a cash deposit upfront to guarantee your credit line.
HELOC: Home Equity Line of Credit – Line of credit secured by your home that gives you a revolving credit line to use for large expenses or to consolidate higher-interest rate debt on other loans.
Consolidate – You have various debts such as credit cards or loan payments that you rolled into one loan or monthly payment.
Collateral – Something pledged as security for repayment of a loan, to be forfeited in the event of a default.
