Glossary of Terms

A legal term referring to a contract that states an unpaid balance can become due immediately if a specific circumstance, such as missing a payment, occurs. 

The amount of money one has in an account at a specific point in time.

A statement of transactions over a specific period of time that typically includes the resulting balance on an account.  

An account, typically a bank account or credit account, that is used regularly or has frequent activity. 

When a creditor refuses an individual’s application for credit or cancels his or her line of credit.

The process of reducing debt through regular installment payments, resulting in the payoff of a loan at its maturity. 

A measure of the cost of credit expressed as a yearly rate.

A percentage reflecting the total amount of interest paid on a deposit account, based on the interest rate and the frequency of compounding for a 365 day period.

A financial statement that is issued on a yearly basis. 

The monetary value of an item given by an appraiser.

A fee paid for an estimation of value (appraisal) given by an appraiser. 

The increase in the value of an asset due to various changes in condition. 

Anything owned by an individual, or a business, which has commercial or exchange value. 

An investigation made in order to verify that all assets, liabilities, income and expenses are correctly stated.  

A machine that processes a variety of self-serve banking transactions, when using some form of credit or debit card, along with a personal identification number. 

An ACH is a computerized facility used by financial institutions that settles payments and deposit transactions electronically. 

The transfer of funds electronically, from one account to another.  

A balance that is determined by adding the purchases and advances for a specific month, to the outstanding balance, and then credits are subtracted. This number is then divided by the amount of days that were in that month, to determine the average balance. 

A final payment that is typically much larger than regular payments, and any outstanding principal and interest remaining on the loan is paid in one lump sum. Balloon payments are typical with loans that have an adjustable rate or an interest only period.

The physical location of a bank that one can go to in order to engage a variety of banking services.

A person or institution that no longer has the funds to cover their debts and has to seek financial assistance.

A unit of measurement for interest rates or yields, equal to 1/100 of a percent.

A person holding a legal instrument.

A person who is entitled to the balance in an account upon the death of the account holder. 

Routine payments, typically bill payments, made electronically from a banking account to a specific vendor. Also a service provided as part of broader Online Banking services. 

An interest-bearing certificate of debt, typically issued by a government or corporation where the issuer is obligated to pay the principal amount at a certain time and to periodically pay interest.

A check that cannot be processed because the account holder has insufficient funds to cover the amount written on the check.

A member of a firm who brings buyers and sellers together.  

The latest time during that specific business day that a transaction can be made and posted to an account.

A rule or law that governs the internal affairs of an organization. 

A check that a bank has already paid and charged to the account holder's account. Once a check is canceled, it is no longer valid.

Cash taken out, or withdrawn, from a line of credit or credit card that often imposes a higher interest charge.

An item that is accepted for immediate credit to an account or that can be exchanged for cash.

A form of check that assures funds are available. The check is written by the bank after cash is given for the full amount.

An interest bearing certificate issued by a bank in exchange for funds provided to the bank by the holder of that certificate.

A personal check that is certified or guaranteed to be good.

When an investor divides invested money into equal amounts of CDs and gives them different maturity dates.

When a lender no longer expects payment to be made to an account and writes off the balance as a bad debt.

A written, dated and signed instrument that contains an unconditional order from the drawer that directs a bank to pay a definite sum of money to a payee.

An account subject to withdrawals and deposits of funds by check.

The movement of a check from the depository institution at which it was deposited to the bank on which it was drawn.

Practice used by financial institutions to make sure checks on deposit will be paid by the drawee bank. After a check "clears," the check hold can be lifted.

The conversion of physical checks into electronic form for transmission to the paying bank.

A credit agreement that specifies when the full amount, plus the finance charges that accrued, are expected to be repaid.

The costs incurred by sellers and buyers in the transfer of real estate ownership.

Assets that are signed over to an institution to secure a loan or form of credit being given.

A loan that is secured by collateral.

Cash deposits or checks that have been presented for payment and for which payment has been received.

A loan given to a business, either all at once, or in a series of payments.

Compound interest is where interest from a previous period is added to the principal balance onto which future interest will be calculated and applied.

When several debts are combined into one loan in order to reduce the dollar amount of payments owed each month.

A financial institution that maintains a relationship with another financial institution, or provides them with services.

An individual who signs for another person and is considered responsible for the loan if the primary signer fails to fulfill his or her obligation.

An authorization of a credit card based on the usable balance. 

An organization that gathers information about an individual’s credit.

A personal credit card or business credit card issued by a financial institution, giving the account holder the ability to borrow funds against the account named on that card.

Insurance that makes payments on a loan(s) if the owner of the loan becomes unable to work due to a disability.

The maximum dollar amount available on a line of credit.

A rating that is given based on how credit-worthy a company or an individual is considered to be.

A report given, and which is based upon, an individual's credit history.

A system used to determine whether or not credit will be granted to an individual or business, based on the score attained.

An organization that provides financial, insurance and other services for members of that specific group. 

The processing of information, either electronically or manually. 

Money taken from an account or money owed to a lender.

A debit card allows electronic access to initiate withdrawals from an individual’s funds.

The amount owed on a debt becomes less, as more payments are made.

A written agreement that allows the title of a property, or an asset of some form, to be transferred from one person to another.

A deposit account that allows the account holder to withdraw funds on demand. 

A deposit account that allows the account holder to withdraw funds on demand.

A method of transferring a payment, such as a salary, electronically from a payer's bank account into the payee's bank account.

A statement that outlines specific terms and conditions of a loan.

Interest earned on any asset account paid by the financial institution to the account holder.

An account that shows no activity over a certain (usually extended) time period.

A check where the payment is guaranteed to be available by the issuing bank.

The transfer of funds electronically between accounts. 

An account used specifically to set aside money for use in an emergency situation. 

When an individual signs his name to a document, giving his rights to the individual or group named in the endorsement. 

Enhanced technology that protects an account from being easily accessed by someone who is unauthorized.

Interest an individual attains on an asset.

The process that is instilled by an institution, and is required to turn over unclaimed members' account balances to the state for safe keeping, when the account has been inactive for a specific period of time. The State of Maryland maintains a database of unclaimed property in which people can search for lost or misplaced property. Visit  http://compnet.comp.state.md.us/Compliance_Division/Unclaimed_Property/ to learn more.

A trust account in which funds are held by the lender for payment. 

Someone in a will who is named responsible for distributing the funds and property in an estate to the rightful heirs.

A United States government corporation created by the Glass–Steagall Act of 1933. It provides deposit insurance, which guarantees the safety of deposits in member banks, up to $250,000 per depositor per bank.

The central banking system in the U.S. that issues money, and provides services, to the federal government and varying financial institutions. Learn more at http://www.federalreserve.gov/.

A person who holds property in trust under the terms of a trust agreement.

The amount of interest paid on a loan.

The amount of money deposited to an account that the financial institution cannot use immediately, because of the time it takes to process checks through the banking system.  

The signing, or altering, of another person’s name in an attempt to be fraudulent.

An account held by an individual in order to save for medical expenses that are not covered by their health plan. Also referred to as an HSA.

A specific amount of an account holder’s balance that cannot be withdrawn until a certain debit or check is posted. 

An account that hasn’t had a deposit or a withdrawal within a certain (usually extended) period of time.

A statistical measure of change in an economy or a securities market. When referring to financial markets, an index is an imaginary portfolio of securities representing a particular market or a portion of it.

An account where only the individual who owns the account is permitted to make transactions.

A retirement savings account for individuals that offers the potential of its deposits being tax-deductible. Consult your financial consultant or tax advisor to learn more.

The amount of money accrued, or the cost associated with the use of money. 

An interest bearing account is a bank account that earns interest over a specific period of time. This is typical of a savings account and may include some checking accounts.

The amount paid by an individual to a lender over a certain period of time.

An account that's shared by at least two people.

All claims against a corporation that are declared payable.  

The lawful right to sell the mortgaged or collateral property of those who fail to meet the obligation of a loan contract. 

The linking of accounts to an individual’s primary account.  

The portion of total assets not held in fixed assets and not loaned to an individual. 

A credit ratio that measures collateral coverage.  

The date upon which a note or a principal obligation becomes due and payable.  

An MFA strengthens the level of security on a login by adding an additional end user authentication factor, which helps to protect against fraudulent activities online. 

An ATM that does not display a bank’s name or logo, and that usually has an added fee associated with its use.

Account information and services available online from an individual’s banking institution.  

An interest rate that is given at the time the account was opened. 

When an account incurs a negative balance from spending more than the funds that were available. 

When an account holder has their checking account linked with another account, as a backup source of funds, in order to prevent a fee from accruing in the case that they spend more than is in the account. 

An individual to whom a check, or other form of financial obligation, is made payable. 

A rate imposed over a specific amount of time.

A number that allows an account holder to gain access to an ATM.  

A way of attempting to acquire information such as user names and passwords by masquerading as a trustworthy entity in an electronic communication. 

A terminal service that allows a banking customer to access their account funds at the place in which the sale is made.

A loan discount used to adjust the yield on a loan to what market conditions demand.  

A legal document that authorizes another individual to act on the behalf of another person in the event that they cannot act for themselves. 

An authorized payment set up in advance by an individual, through their banking institution, in order to automatically pay bills or make payments. 

When a penalty is imposed on an individual for repaying an amount borrowed before it was due. 

The permanent residence where an individual claims to reside.  

An interest rate charged by a financial institution for loans made to larger business borrowers; typically the best rate available. 

The amount borrowed, or the amount still owed on a loan, separate from interest. 

Insurance written by a private company that protects the mortgage lender against a potential loss incurred by a mortgage default.

When an individual agrees in written form to pay another person a specific amount of money by a certain date. 

Replacing an old loan with a newer loan offering better terms. 

A specified line of credit that can be used repeatedly.

A nine-digit number used to identify a financial institution. 

An account maintained by an individual with the purpose being to save money and accumulate funds.

When a loan is defaulted on, the lender can claim payment of the debt owed, by attaining the specific property agreed upon by the borrower.  

A charge issued for a specific service given by an institution.  

The interest on an outstanding balance that produces a declining finance charge with each payment of the installment loan made.

When a portion of a deposit is credited to an individual’s account and the balance is taken in cash.

When an account holder issues a verbal or written statement stating they no longer wish to pay a specific check or draft. Once a stop payment is issued, funds cannot be drawn on that check.

Institutions, such as mutual savings banks, savings and loan associations, and credit unions.   

A deposit that cannot be withdrawn for a certain period of time without hefty penalties being applied. 

A regulation that limits certain withdrawals and transfers from certain accounts.

Funds moved from one account to another.

A check that functions just like cash and is protected if lost or stolen. Often used during times of travel.

A short-term debt obligation backed by the U.S. government with a maturity of less than one year. 

A person who holds property for the benefit of someone else.  

A loan given and based on the borrower’s credit. 

A loan plan where the interest charged, over the life of the loan, may vary.

A method of transferring funds electronically from one person or institution to another. 

When an account holder is not held responsible for charges incurred on a lost or stolen card.