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Bounced Check
A "bounced" check is one that a financial institution has refused to cash or pay. It might be because the account was closed, or there were insufficient funds to cover the amount of the check. Nonsufficient funds (NSF) are one reason for a bounced check. It is estimated that 90% of bounced checks are due to consumers' math errors in balancing their checkbook.

Cash
Money in the form of paper and coins (i.e., U.S. dollars and cents). In banking, the act of paying a check.

Certificate of Deposit
A savings account in which an individual promises to deposit the money for a set period of time, for which the financial institution pays higher interest than a regular savings account.

Chapter 7
Commonly referred to as a "straight bankruptcy." In Chapter 7 bankruptcy all unsecured debt, such as credit card debt, is canceled. Secured debts must be paid or the collateral (a car, for example) is surrendered to the financial institution. In some states, it may be possible to retain such possessions as work-related tools and basic household goods.

Chapter 11
This chapter is a reorganization chapter where a debtor seeks to rehabilitate and reorganize its financial structure. This plan is normally used by businesses but can be filed by an individual debtor. A company can "remain in possession of their business". In other words, the company can continue to run, but must have a court-approved repayment plan for all non-exempt debt.

Chapter 13
"Reorganization" bankruptcy. This procedure involves an adjustment of debt for a person or business with a regular income. Levels of secured and unsecured debt must be below certain limits. All debts are consolidated and reduced to one monthly payment based on disposable income. The filer may keep property such as a car, home or business.

Check
A written document instructing a financial institution to pay money from the writer's account.

Check Card
A card enhanced with ATM and point-of-sale features that can be used to purchase goods and services electronically. The card replaces cash or checks. Transactions are deducted from the cardholder's checking account either immediately or within one to three days. Depending upon the type of card, a check card may require a signature or entering a PIN number into special equipment.

Checking Account
An account for which the holder can write checks. Sometimes fees are charged if minimum requirements aren't met.

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 take the collateral. Collateral is most commonly in the form of real estate (i.e. a home) or property, like a car.

Commercial Bank
Non-governmental financial institutions. Sometimes called fullservice banks because they provide a wide range of services, such as checking and savings accounts, credit and loan arrangements, and safety deposit box rentals. Commercial banks often sell and redeem U.S. Savings bonds.

Compound Interest
Interest calculated not only on the original principal but also on the interest already accrued.

Credit
In business, buying or borrowing on the promise to repay at a later date. In any credit arrangement, there is a creditor (a person, financial institution, store, or company to whom money is owned) and a debtor (the person who owes the money). In bookkeeping, a sum of money due to an individual or institution.

Credit Bureau
A credit reporting agency that checks credit information and keeps files on people who apply for and use credit.

Credit Card
A plastic card that gives access to a line of credit. Users are limited in how much they can charge, but they are not required to repay the full amount each month. Instead the balance (or "revolve") accrues interest with only a minimum payment due.

Credit Line
The maximum dollar amount that can be charged on a specific card account.

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 Report
A report on a consumer's level of indebtedness and bill paying behavior. Information for the report is submitted to credit reporting agencies (or credit bureaus) from an individual's creditors. The agencies compile the report and release it to lenders and others with the consumer's permission.

Credit Union
A member-owned financial institution, either state or federally chartered.

Currency
Money - anything used as a common medium of exchange. In practice, currency means cash, particularly paper money. Bankers often use the phrase "coin and currency" to refer to cents and dollars.

Debit
A bookkeeping term for a sum of money owed by an individual or institution; a charge deducted from an account.

Debit Card
See check card.

Demand Deposit Account
A type of checking account.

Deposit Slip
An itemized slip showing the exact amount of paper money, coin, and checks being deposited to a particular account.

Depositor
An individual or company who puts money in an account.

Direct Deposit
Earnings (or government payments) automatically deposited into accounts, saving time, effort and money.

Finance Charge
This term covers the total cost of credit. It includes interest, and all other charges established by the issuing financial institution as a condition of credit. Charges may include: service fees, late fees, transaction fees and other miscellaneous charges.

Fixed Rates
An interest rate that doesn't change. The APR is usually a fixed rate.

Grace Period
The period before interest begins to accrue on new purchases.

Identify Theft
A form of fraud in which a consumer's financial information is illegally acquired for the purpose of making unauthorized purchases and transactions with their credit cards, or with funds from their checking or savings accounts.

Interest
The fee paid for the use of money. Interest may be paid, for example, by an individual to a financial institution for credit card use, or by a financial institution to an individual for credit card use, or by a financial institution to an individual for holding a savings account; interest is expressed in terms of annual percentage rate (APR).

Interest Calculation Method
The way interest is calculated on a credit card balance. It can be charged by the day or month and includes interest on the unpaid balance.

Interest Rate
The percent, per unit of time, of the total sum borrowed that is charged by a bank or financial institution for the use of their money, 15 percent per year, for example. Credit card interest may be computed by the year, by the month, or by the day.

Introductory Rates
Credit cards use the introductory rate as a special promotional offer. After a period of time, the rate usually returns to the standard rate.

Joint Account
A savings or checking account established in the names of more than one person (e.g., parent/child, wife/husband).

Liabilities
In a financial sense, money owed to individuals, businesses or institutions.

Line of Credit
An authorized amount of credit given to an individual, business or institution.

Minimum Payment
The minimum dollar amount that must be paid each month, usually 2 to 3 percent of the amount owed based on the average daily balance.

Money
Anything generally recognized as a medium of exchange.

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.

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".

Passbook
A booklet given by the financial institution to the depositor to record deposits, withdrawals, and interest earned on a savings account.

Payee
An individual or company to whom a check is written; one who receives money as payment.

Payer
An individual or company who writes a check; one who gives money as payment.

Payment Schedule
Credit cards often have a choice between partial payments with a minimum due or full payment, where the full balance is expected.

Periodic Rate
A variable interest rate that may increase or decrease during each calendar quarter and affect both the finance charges and the minimum payment due on a credit card.

Prime Rate
An index rate that is used to determine the APR in a variable interest rate account. The interest rate given to a consumer or business is often based on the prime rate plus a risk factor. This risk factor is calculated by evaluating several items (i.e., credit score, payment history, financial strength, etc.)

Principal
The original amount of money borrowed, deposited, or invested before interest accrues.

Purchasing Card
A credit card used by companies to make purchases of $5,000 or less. It eliminates the need for purchase orders. Orders are placed directly with a participating supplier and charged to the purchasing card.

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.

Savings Account
An account that accrues interest in exchange for its use of the money on deposit. The depositor is usually allowed an unlimited number of deposits and withdrawals.

Savings and Loan Association
State-chartered or federally-chartered financial institution that accepts deposits from the public and invests those funds primarily in residential mortgage loans.

Secured Card
A credit card that is secured by an amount deposited in a designated savings account. The credit limit usually equals the amount of the security deposit. If balances are not paid, the deposit will be used to cover the debt.

Service Fee
A monthly fee a financial institution charges for handling a checking account.

Stop Payment
A request made to a financial institution not to 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.

Terms
The period of time and the interest rate arranged between creditor and debtor to repay a loan.

Truth-In-Lending Act
A federal law that requires lenders to disclose the costs and terms of borrowing money for a loan or credit card.

Variable Rate
An interest rate that can change periodically.

Withdrawal
An amount of money taken out of an account.

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