Glossary of financial terms
ABM or ATM Automated bank machine or automated teller machine.
Account Think of this as the digital container that your credit union uses to hold your money. In reality, it’s the accounting of how your funds flow in and out of your credit union.
Adjustable rate An interest rate that varies according to changes in the prime rate.
Amortization The amount of time over which a debt is repaid in full by regular payments.
Check A written authorization that lets another person or company withdraw money from your account.
Checking account This is a transactional account, meaning money flows in and out constantly. Paying bills, depositing checks or buying a coffee are some common transactions. Because of this constant movement of funds, these accounts pay very little–if any–interest.
Cooperative An organization owned and run jointly by its members, with profits shared.
Credit card A credit card is like an easy-access loan from your credit union. It typically has a maximum limit and a high interest rate. You should only use a credit card in cases of extreme emergency.
Debit card A debit card allows you access to the cash held by your credit union. The debit card has largely replaced the use of checks for most things, except personal payments between people.
Debt An amount of money you owe to someone, even if it’s your mom (especially if it’s your mom!)
Equity The value of a thing you own, after you subtract the money still owing on it. For example, it’s the value of your car after you subtract your loan, or the difference between the market value of your home and the amount of your mortgage (money you owe to your lender).
Escrow Money, property or a legal document held in the possession of a third party until a specific condition has been fulfilled.
Fixed rate An interest rate that doesn’t change, usually for a specific term.
Insurance (homeowners) An amount you pay (usually monthly) to protect your home, property and belongings against fire, theft and other damage.
Insurance (mortgage) A safeguard against you defaulting on your mortgage payments. Paid monthly. Usually assessed if you are unable to put 20% or more as a down payment on the cost of your home.
Interest Amount paid to your credit union for the use of the money loaned to you by your credit union.
Loan A sum of money you borrow from your credit union. The loan will have a preset monthly payment and rate of interest that you pay on top of the money you borrowed. Think of the interest as a fee for borrowing the money.
Membership Being a member of an organization such as a credit union.
Mortgage An agreement by which money is lent for buying property.
Net worth A calculation of the value of all the things you own, minus the money you owe on them. The difference is your net worth.
Prime rate The best rate a financial institution will offer its best members. The prime rate is indexed 300 basis points above the federal funds rate, which is the rate that banks charge each other for overnight loans.
Principal An amount invested or lent, excluding interest, taxes or other fees.
Retirement The state of having left employment, usually because of age.
Savings account An account meant to accumulate money towards a particular purchasing goal. It generally pays a modest amount of interest.
Shares One share represents ownership in your credit union. When you join a credit union,
the membership shares you buy stay in a share account.
Subsidized A cost that is reduced by a subsidy or cash sponsorship.
Tax-deferred Postponed payment of government revenue levied on individuals, property or businesses.
Term A set amount of time for which an interest rate and payments are assessed (a smaller amount of time within the overall amortization of a mortgage).
Title Right to ownership of a property, whether in your possession or not.
Transferable Something that can be conveyed, removed or handed over, as in a benefit or piece of property.
Unsubsidized A cost that is not reduced by a subsidy or cash sponsorship.