Glossary of Financial Terms
A B C E F G I J L M N O P R S W
ABA Routing Number
A unique number that identifying and directs electronic deposits and credits to the proper financial institution. This number, printed in special ink for security purposes, precedes the account number printed at the bottom of a check. It is most often requested by employer payroll offices to arrange for direct deposit and by merchants which accept checks online or over the phone. The ABA routing number for NWFCU is 256075025.
Accrued Interest
Interest on an account which has been accumulated but not yet paid.
Annual Percentage Rate (APR)
The interest rate that reflects the actual cost of credit on a yearly basis expressed as a percentage.
Annual Percentage Yield (APY)
The interest rate that reflects the actual interest earned on a yearly basis expressed as a percentage.
Items of monetary value (e.g., house, land, car) owned by an individual or company.
Audit
An official investigation to verify that all assets, liabilities, income and expenses of a financial institution are correctly stated. The audit of an institution's operation also serves to inhibit fraud and errors, and determines the accuracy of accounting and bookkeeping procedures.
Automated Clearing House (ACH)
The Automated Clearing House (ACH) is a nationwide mechanism that processes large volumes of electronically originated batches of credit and debit transactions. Rules and regulation governing ACH is established by the National Automated Clearing House Association (NACHA) and the Federal Reserve. ACH credit transfers include direct deposit payroll payments and payments to contractors and vendors. ACH debit transfers include consumer payments on insurance premiums, mortgage loans, and other kinds of bills.
Automated Teller Machine (ATM)
Acronym for automated teller machine.
Average Daily Balance
The balance that results from adding together all the daily balances of a credit account in the billing cycle and dividing by the number of days in the billing cycle. This balance is often used to calculate finance charges.
Balance
In banking, balance refers to the amount of money in a particular account. In credit, balance refers to the amount owed.
Bankrupt
A debtor who is judged legally insolvent and whose remaining property is administered for distribution among his creditors
Bearer
The person actually holding a legal instrument, such as a check, payable to "bearer" or endorsed in blank
Beneficiary
A person who is entitled to the balance in an account upon the death of the owner (trustee) of the account
Bond
1) an interest-bearing certificate of debt, usually issued by a government or corporation, by which the issuer obligates itself to pay the principal amount at a specified time and to pay interest periodically (2) A legal contract by which an insurance company agrees to pay, within stated limits, for financial loss caused by the default or dishonest acts of a third party
Bounced Check
A check that a bank has refused to cash or pay because you have no funds to cover it in your account.
Cancelled Check
A "used" check that has been paid and subtracted from the check-writer's account. Cancelled checks have extra data on them from the Financial Institution.
Cash Advance
A cash loan from a financial institution; obtained with a credit card (i.e., Visa) or a check that accesses a line of credit
Cashier's Check
A check issued by a financial institution, drawn on its own funds rather than on one of its depositor's funds.
Certificate of Deposit (CD)
An instrument that is issued by the credit union in the name of the member stating that a certain sum of money is on deposit and that the member agrees to keep this money at the credit union for a certain period of time. CDs vary widely in amount and term, and the rate of interest depends on both of these factors.
Certified Check
A personal or business check for which payment is guaranteed by the drawee bank. Proof of the guarantee is shown when the bank stamps the word "certified" on the face of the check.
Charge Off
To treat as a loss
Check Card
See debit card.
Check Hold
Practice used by most financial institutions to ensure checks on deposit will, in fact, be paid by the drawee bank. It was developed to protect consumers and financial institutions from fraud and bounced checks. Checks held in members' accounts earn interest during the hold period.
Checking Account
Type of account which enables members to withdraw their own available funds simply by writing a check.
Clear
A check "clears" when its amount is debited (subtracted) from the payer's account and credited (added) to the payee's account.
Collateral
Anything that a financial institution accepts as security against the debtor's not repaying a loan. If the debtor fails to repay the loan, the financial institution is allowed to keep the collateral.
Compound Interest
Interest calculated not only on the original principal, but also on the interest already accrued.
Co-Signer
The person who signs on a credit agreement in addition to the primary applicant. This person is legally responsible for repayment of the debt.
Credit Rating
A financial institution's evaluation of whether a person is suitable to receive credit. Credit ratings are based on an individual's character, capacity to repay, and capital.
Credit Union
A member-owned financial institution, either state or federally chartered. Credit unions are often more competitive than banks and savings and loan associations because its nonprofit status makes its operating costs lower.
To sign, as the payee, the back of a check before cashing, depositing, or giving it to someone else. The first endorsement must be made by the payee to authorize the transaction. Later endorsements may be made by whoever receives the check.
Field of Membership (FOM)This is the group, or groups of people who are eligible to join a particular credit union. Grace Period
The length of time between the use of credit to make a purchase and the start of interest on the amount charged.
Insufficient Funds
When a member's account does not contain enough money to cover a check or withdrawal ticket presented for payment; also referred to as non-sufficient funds (NSF).
Interest
Money paid in return for the use of money.
Joint Account
A savings or checking account established in the names of more than one person (e.g., parent/child, wife/husband).
Lien
The right to hold any property given as a pledge or security until the debt it secures is paid. To constitute a lien, the debt must be enforceable in equity or law; (e.g., a mortgage).
Maturity Date
The date on which a share certificate, bond or other instrument comes due.
Mortgage
A long-term loan obtained by individuals to buy a home that legally transfers ownership from the debtor to the creditor until the debt is paid.
Non-Sufficient Funds (NSF)
See Insufficient Funds.
National Credit Union Administration (NCUA)
The National Credit Union Administration (NCUA) is the federal agency that charters and supervises federal credit unions and insures savings in federal and most state-chartered credit unions across the country through the National Credit Union Share Insurance Fund (NCUSIF), a federal fund backed by the full faith and credit of the United States government.
National Credit Union Share Insurance Fund (NCUSIF)
The shares in your credit union are insured by the National Credit Union Share Insurance Fund (NCUSIF), an arm of NCUA. Established by Congress in 1970 to insure member share accounts at federally insured credit unions, the NCUSIF is managed by NCUA under the direction of the three-person NCUA Board. Your share insurance is similar to the deposit insurance protection offered by the Federal Deposit Insurance Corporation (FDIC). The NCUA Share Insurance Estimator is an educational resource about share insurance and gives a detailed explanation of insurance coverage.
Official Check
A check that is (1) drawn on a financial institution, (2) signed by an officer or authorized signer on behalf of the financial institution as a drawer, (3) a direct obligation of the financial institution, and (4) provided to a member of the financial institution or obtained from the financial institution for remittance purposes.
Overdraft
A check written for more money than is currently in the account. If the financial institution refuses to cash the check, it is said to have "bounced."
Point-of-Sale (POS)
Terminals that allow you to pay for retail purchases with your debit card.
Pre-Approved
A term used to denote a credit offer that is extended after the creditor has performed a credit pre-screening process.
Principal
The original amount of money borrowed, deposited, or invested before interest accrues.
Refinance
To revise a loan agreement to make the terms of payment more suitable to a borrower's present income and ability to repay. Refinancing usually provides a lower interest rate and lower monthly payments over a longer period of time.
Service Charge
A monthly fee a financial institution charges for handling a checking account.
Share Certificate
A form of savings deposit on which a financial institution pays principal and interest at a stated maturity date.
Stop Payment
A request made to a financial institution to not pay a specific check. If requested soon enough, the check will not be debited from the payer's account. Normally there is a charge for this service.
Variable Rate
An interest rate that changes and is determined by adding the index rate to the previously disclosed margin.
Wire Transfer
A transaction that electronically transfers money from one financial institution to another.
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