ACH - This means Automatic Clearing House - the technique we employ to send money to and from bank accounts.
APR or Annual Percentage Rate - This refers to credit cost, which is calculated on per annum basis. This is different from the contract interest rate.
Balance - This refers to the amount you are yet to pay out of your loan
Bankruptcy - This is a legal proceeding that can be sought by a borrower if they are unable to pay back their debts. Depending on the type of bankruptcy filed, the borrower's assets, and even some of their personal belongings, may be sold to offset as much of their debts as possible. However, bankruptcy information can remain on a person's credit history for as much as ten years.
Budget - A scheme or strategy employed for managing, spending, and saving money.
Caps - The set maximum interest rate of an amount, which may be raised to a flexible rate for mortgage loans.
Cash advance - This refers to a source of cash that can be accessed in an emergency. This is for people who have day jobs but do not have access to other credit sources. It is intended to bridge the financial gap between now and the next payday. The interest is calculated from the date the cash advance is given.
Charge off - This refers to a credit card loan or debt that's been written off as being irrecoverable from a borrower. This is sometimes the case when the loan or debt has been sold to a collection agency. Such debt remains retrievable.
Checking account - Refers to money kept in a bank or savings for safekeeping. Such money can be readily withdrawn from an ATM or with a check.
Collateral - Usually an asset that is mortgaged to guarantee debt repayment.
Compound interest - The interest computed on the outstanding debt, which will include all unpaid interests.
Co-signer - Someone who voluntarily signs a loan agreement with the borrower and agrees to be partly responsible for the loan repayment.
Credit - The pledge to pay for goods or services provided immediately at a later date.
Credit request - A written request for credit. This sometimes attracts a request fee, which will cover the cost of processing the loan.
Credit bureau - An organization whose major work is to keep records of the credit histories of borrowers and provide same to lenders to help them make proper lending decisions. The most popular of such organizations in America are Experian, TransUnion, and Equifax.
Credit card - This is a card issued by banks to enable their customers to make payments for purchases on credit. There's an interest attached to the outstanding balance.
Credit counseling - A form of counseling which is provided by some organizations, with the aim of helping consumers fix their credit to get out of financial crisis.
Credit limit - The maximum amount of money chargeable on a credit card or line of credit.
Credit line - It is usually referred to as personal line of credit and is the highest amount an individual can get against their account. They'll only be allowed to borrow again on their account when their credit line has been repaid.
Credit report - This is a report detailing a person's debt repayment history, late repayments, outstanding debts, and bankruptcies.
Creditor - An individual or business you owe money to or are borrowing money from.
Debit card - This card is issued by banks or other financial institutions and is usually used to make purchases. It is usually linked to a checking account from where the money for the purchases you make are deducted.
Debt Consolidation - This refers to a strategy which people sometimes use to enhance their debt management issues. Instead of choosing to pay many bills monthly, a consumer will simply pay their debt with one bill to one financial institution.
Default - The failure to meet the terms of agreement of a loan, or failure to repay the loan.
Delinquency - Failure to meet the repayment deadline.
Direct Deposit - This is an electronic funds transfer directly to a bank account, taking out the need for a paper check.
Equal Credit Opportunity Act - This is a federal law which prohibits all forms of applicant discrimination by lenders.
E-Signature - This is sometimes referred to as an electronic signature. It requires software which binds your signature or some other mark to a document. This type of signature is completely legal, following the E-sign bill which was passed by the government in June 2000.
The Fair Credit Reporting Act - This is a federal law which allows borrowers the right to know exactly what info credit reporting agencies currently have on them and to dispute incorrect data if any.
FDIC or Federal Deposit Insurance Corporation - Usually a federal agency which insures a consumer's deposit in their savings and for a loan of up to $100,000 for every account. These deposits will include savings and checking accounts and also deposit certificates.
Finance charge - Credit costs in dollars.
A fixed interest rate - An interest rate which will remain unchanged throughout the term of the loan.
Foreclosure - This is a legal process involving the sale of collateral pledged for a loan by a defaulting borrower is sold to repay the loan.
Installment loan - This is a loan with a fixed loan amount and number of payments.
Interest - A fee charged by the lender for lending out a sum of money.
Interest rate - The percentage of the amount a lender lends out that they charge as interest for the loan.
Judgment - This is a court pronouncement declaring the winner in a lawsuit situation.
Late payment fee - This is a fee charged for a payment not made within the agreed time.
Lease - This is a legal contract which gives a borrower the option to pay with an asset. However, the asset has to be returned at the end of the lease term.
Lender - An individual or a business in the business of giving loans to people.
Liable - to have legal responsibility.
Lien - When a creditor lays claim to a defaulting borrower's property to ensure their debt is offset.
Loan - Any amount that is borrowed with an agreement to pay back with interest.
Loan Agreement - This is a legal contract which contains all the terms and conditions of the loan.
Mortgage loan - This is a loan taken to acquire a piece of real estate. Here the acquired property typically serves as the collateral for the loan.
Public Record - This refers to information which can be obtained from federal, state or other sources which details an individual's history of financial obligations which may include child support and alimony.
Refinance - The practice of taking a new loan to pay off an existing loan with the aim of enjoying a lower interest rate.
Repossess - The voluntary or forced surrender of items, by a borrower, in the case of a default.
Right of recession - The right of a borrower to terminate the contract. This right can be exercised within just three working days.
Savings account - Refers to money deposited in a savings account for safekeeping. Note that money kept in a savings account will yield interests.
Secured loan - This is a loan for which the borrower is required to provide collateral or security before the loan will be disbursed.
Security - See collateral above.
Simple interest - This is the interest chargeable on the amount of the loan yet to be paid, excluding unpaid interests.
Title - This is a document which confirms ownership of property.
Truth in Lending Act - This is a federal law which mostly mandates lenders to come out clean to borrowers about all the fees and terms of the loan, without any hidden charges.
Unsecured loan - This is a loan given with the hope that the borrower keeps to their promise to repay. Usually happens if the borrower has a very impressive credit history.
Variable interest rate - Thus is an interest rate which is subject to change depending on the current index, like a prime rate.
Yield - Refers to the interest paid on bonds, savings or money market accounts.