W!SE Vocabulary

Mortgage

A specific type of loan used to buy real estate

Collateral

Capital or assets that can be used to repay a loan

Fixed Expenses

Expenses or amounts you have already committed to spend that generally stay the same from month to month

Default

To fail to pay back a loan

Budget

(Noun)- a plan for managing income and expenses (Verb)- To plan or to manage income and expenses

Pawn ticket

A receipt for items obtained by a pawnshop

Money

Anything that can be used to settle debt; used to exchange goods and services

Long-term Goal

Goals that usually take 1+ years to accomplish

Intermediary Goal

Goals you can accomplish within 3 months to a year.

Auto Finance Companies

Provides inventory financing services for retail and wholesale automotive dealers.

Automatic bill payment

Represent money that you have authorized your bank or other organization to move from one account to another at regular intervals.

Minimum balance required

The minimum dollar amount that a customer must have in an account in order to receive some sort of service, such as keeping the account open or receive interest.

Online Banking

The performance of banking activities via the Internet

Prepayment

The satisfaction of a debt or installment payment before its official due date

Minimum payment

The smallest amount of a credit card bill that a consumer can pay, to remain in good standing with the credit card company.

Balance Owed

The total amount of money owed to a third party such as a credit card company, utility company, mortgage banker or other type of lender or creditor.

Bank

A business or financial institution that stores and manages money for individuals and other businesses.

ATM Card

A card that allows you to withdraw money from your checking account, but only through an ATM machine. Unlike debit cards, ATM cards do not have the Visa or MasterCard logo and, in most cases, may not be used to make store purchases directly.

Charge Card

A card that charges no interest but requires the user to pay his/her balance in full upon receipt of the statement, usually on a monthly basis.

Cash Card

A card that you can insert into an ATM or other cash dispenser, a pre-paid or reloadable card, or a card with a preset cash value from a particular store, which is read by a cash card reader and used to pay for products or services at that retailer.

Credit Card

A card used to buy goods and services, to be repaid at a later date.

Store Cash Card

A card with a preset cash value form a particular store, usually pre-paid and reloadable

Late fee

A charge against a client by a company or organization for not paying a bill or returning a rented or borrowed item by its due date

Paycheck

A check issued to an employee in payment of salary or wages.

Electronic Funds Transfer

A computer-based system that moves money from one account to another without writing a check or using cash.

Home equity loan

A consumer loan secured by a second mortgage, allowing home owners to borrow against their equity in the home.

Goals

A desired end toward which efforts are directed.

Medicare

A federal government program that is designed to provide low-cost medical insurance for Americans who are age 65 or older or have certain disabilities.

Truth in Lending Act of 1968

A federal law that requires financial institution to disclose specific information about the terms and cost of credit.

Annual Percentage Rate (APR)

A finance charge, or the cost of credit, expressed as an annual rate.

Lien

A financial claim against a property

Commercial Bank

A financial institution that provides services, such as accepting deposits, giving business loans and auto loans, mortgage lending, and basic investment products like savings accounts and certificates of deposit.

Chapter 11 Bankruptcy

A form of bankruptcy that involves a reorganization of a business's debts, affiars, and assets.

Universal Variable Life Insurance

A form of cash-value life insurance that offers both a death benefit and an investment feature. The premium amount for variable universal life insurance is flexible and may be changed by the consumer as needed, though this can change coverage. The investment functions very similar to mutual funds and can provide exposure to stocks and bonds

Pawn shop

A legal business that makes high-interest loans based on the value of personal possessions pledged as collateral

Bankruptcy

A legal process in which you declare yourself legally unable to pay your outstanding debts.

Garnishment

A legal process that allows part of your paycheck to be withheld to pay a debt

Whole Life Insurance

A life insurance contract with level premiums that has both insurance and an investment component. The insurance component pays a stated amount upon death of the insured. The investment component accumulates a cash value that the policyholder can withdraw or borrow against.

Overdraft protection

A line of credit that banks offer to their customers to cover their overdrafts. Overdraft protection kicks in when a customer makes a transaction for more than the amount in their account

Co-signed loan

A loan in which another individual promises to pay if the borrower fails to pay

Installment loan

A loan repaid with interest in equal periodic payments

Primary Market

A market that issues new securities on an exchange

Stock Exchanges

A marketplace where brokers who are representing investors meet to buy and sell securities

Credit Rating

A measure of creditworthiness based on an analysis of your credit and financial history.

Liquidity

A measure of how quickly you can get your cash without loss of value.

Rule of 72

A method of finding the number of years required to double your money at a given interest rate; divide 72 by the expected interest rate. You can do the same process to find the interest rate required to double your money at a given number of years..

PIN number

A numerical code used in many electronic financial transactions. Usually required when using bank debit or credit cards, and usually contains 4 digits.

Store Card

A plastic card that you use to buy goods on credit from a specific store or chain of stores. It is a credit-card that typically bears the name of the store

Chapter 7 Bankruptcy

A process of wiping out most debts, including those owed to credit card companies and doctors or hospitals. Secured or "fixed" debts such as mortgages, student loans, taxes, and child support NOT erased.

Bull Market

A prolonged period of rising stock prices and a general feeling of investor optimism.

Credit History

A record of your credit transactions over the past seven to ten years

Chapter 13 Bankruptcy

A reorganization bankruptcy for individuals that allows debtors to keep most of their property and use their income to pay a portion of their debts over 3 to 5 years

Money Market Account

A savings account that offers a more competitive interest rate than a regular savings account, but generally a higher minimum balance

Cash Advance

A service provided by many credit card issuers allowing cardholders to withdraw a certain amount of cash, either through an ATM or directly from a bank or other financial agency. Cash advances typically carry a high interest rate - even higher than the credit card itself - and the interest begins to accrue immediately

Cashless Society

A society in which purchases of goods or services are made by credit/debit card or electronic funds transfers rather than with cash or checks.

Equities

A stock or any other security representing an ownership interest.

Spending Plan

A strategy for saving and spending money

Certificate of Deposit

A time deposit where a fixed rate of interest is earned for a specified length of time.

Grace period

A timeframe within which you may pay your current balance in full and incur no interest charges

Debtors anonymous

A twelve-step program for people who want to stop incurring debt

Liquidation

A type of bankruptcy where assets are sold and debts are paid as much as possible; there is no repayment plan

Secured Credit Card

A type of credit card that is backed by a savings account used as collateral on the credit available with the card.

Money Market Account

A type of savings account that offers a more competitive interest rate than a regular savings account

Stock Symbol

A unique series of letters assigned to a security for trading purposes. NYSE and AMEX listed stocks have three characters or less. Nasdaq-listed securities have four or five characters

Penalty

A very high interest rate charged by the credit card issuer when a borrower violates the card's terms and conditions

Credit report

A written statement of a consumer's credit history, issued by a credit bureau

Managed Care Health Insurance

Also called prepaid plans because because you or your employer pay for health care coverage in advance instead of paying for services as you use them. Your premium is your payment.

Debit Card

Also known as a check card; a plastic card that deducts money from a checking account almost immediately to pay for purchases

Check Card

Also known as a debit card; a plastic card that deducts money from a checking account almost immediately to pay for purchases

Secured Loan

Also known as an collaterized loan, where the promise to repay a loan is backed by some type of collateral (house, car, property, etc...)

Unsecured Loan

Also known as uncollaterized loan that is issued and supported only by the borrower's creditworthiness, rather than by a type of collateral.

Emergency Fund

An account that is used to set aside funds to be used in an emergency, such as the loss of a job, an illness or a major expense.

Securities Exchange Commission (SEC)

An agency that protects investors and maintains the integrity of the security markets.

Line of Credit

An arrangement in which a bank or vendor extends a specified amount of unsecured credit to a specified borrower for a specified time period

Investment

An asset or item that is purchased with the hope of that it will generate income or appreciate in the future

ATM

An electronic banking outlet, which allows customers to complete basic transactions without the aid of a branch representative or teller.

Stock Split

An increase in the number of outstanding shares of a company's stock

Broker

An individual or firm, that charges a fee or commission for carrying out buy and sell orders submitted by an investor.

Automobile Insurance

An insurance policy purchased by vehicle owners to ease costs associated with getting into an auto accident

Fixed interest rate

An interest rate on a liability, such as a loan or mortgage that remains fixed either for the entire term of the loan or for part of this term

Variable Interest Rate

An interest rate on a loan or security that fluctuates over time, because it is based on an underlying benchmark interest rate or index that changes periodically

Direct Deposit

Automatically depositing a paycheck into a bank account using electronic funds

Credit reporting agency

Businesses that maintain historical info pertaining to credit experience on individuals or businesses.

Portfolio

Collection of investments

Credit Card companies

Companies MasterCard, Visa, and Discover that issue credit cards that give users options to borrow funds.

Expenses

Costs incurred or the spending of money

Bond

Debt obligations of corporations (corporate bonds) or state or local governments (municipal bonds). When a corporation or government body sells a bond, it is borrowing money form the investor.

Consumer debt

Debts that are owed as a result of purchasing goods that are consumable

Predatory Lending

Dishonest actions carried out by a lender to entice, induce and/or assist a borrower in taking a loan that carries high fees, a high interest rate, strips the borrower of equity, or places the borrower in a lower credit rated loan to the benefit of the lender.

Interest

Earnings on principal; Or the price paid for the use of borrowed money.

Income

Earnings or payment received for resources provided such as labor

Variable Expenses

Expenses or amounts that you are not committed to spend that generally change from month to month

Claim

Formal request made to an insurance company for payment for a loss

Short-term Goal

Goals you can accomplish in the near future; usually within 1 to 3 months.

Unemployment Insurance

Government sponsored insurance program designed to provide income for people who have lost their jobs through no fault on their own.

Medicaid

Government-sponsored health insurance designed for people with low incomes or disabilities, regardless of age

Long-term Care Insurance

Insurance designed to cover the cost of a chronic illness or disability that leaves you unable to care for yourself for an extended period of time. Premiums for long-term care are relatively high.

Property Damage Liability Insurance

Insurance that pays for damage you caused to another person's property.

Renter's Insurance

Insurance that protects renters from property and liability losses.

Umbrella Policy

Insurance that provides additional liability protection beyond that in an automobile or homeowner's policy.

Homeowner's Insurance

Insurance that provides personal property and liability protection for your home.

Disability Insurance

Insurance to replace your lost income when you cannot work because of an accident or illness.

Compound Interest

Interest calculated on both the principal and interest previously earned

Simple Interest

Interest computed only on the principal amount (initial amount)

Title For Goods

Legally established ownership to property.

Term Life Insurance

Life insurance that pays a death benefit if the policyholder dies within a specific time period has no remaining value at the end of this time.

Credit Union

Member-owned financial co-operative. These institutions are created by its members and profits are shared amongst the owners.

Dividend

Money paid to stockholders form the corporation's earnings.

New York Stock Exchange

NYSE. The largest securities exchange in the United States located on Wall Street in NYC.

NASDAQ Market

National Association of Securities Dealers Automated Quotation. A computerized system that facilitates trading and provides price quotations on the more actively traded over the counter stocks such as Microsoft, Intel, Dell, and Cisco

Dow Jones Industrial Average

Often called the Dow. Widely followed stock index that is an average of the price movements of 30 major stocks (blue-chip stocks) listed in the New York Stock Exchange

Big Board

Oldest and largest stock exchange in the U.S., located on Wall Street in NYC. Also called New York Stock Exchange (NYSE)

Comprehensive Coverage

Pay for damage to your car caused by something other than a collision. Examples: Earthquakes, fire, winds, hail, and floods.

Death Benefit

Payment made to the beneficiary of a life insurance policy upon the death of the insured person.

Collision Coverage

Pays for damage to your car caused by colliding with another car or object. Collision coverage carries a deductible and is likely to be one of the most expensive portions of an automobile policy

Stockholder

People who own shares of stock

Beneficiary

Person specified in a life insurance policy to receive payment upon the death of the insured person.

Consumer Credit Counseling Services (CCCS)

Personalized counseling services that provide guidance and support for those who have gotten in over their heads financially. Legitimate credit counseling firms are affiliated with the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies.

Gift Card

Preloaded debit card that allows the cardholder to use it for the purchase of goods or services. Sometimes purchases with this card are restricted to specific businesses.

Mutual Fund

Professionally managed group of investments bought using a pool of money from many investors

Capital Gain

Profit earned from the sale of assets such as stocks, bonds, or real estate. Increase in the value of stock over time.

Bear Market

Prolonged period of falling stock prices and a general feeling of investor pessimism

Premium

Regular payment required to purchase insurance

Preferred Stock

Represents a type of stock that pays a fixed dividend but has no voting rights.

Repossession

Retaking possession of something when a borrower defaults on payments

Insurance

Risk management tool that limits financial loss due to illness, injury or damage in exchange for a premium

Foreclosure

Seizure of property from borrowers who are unable to repay their loans

Pay Yourself First

Setting aside a certain amount of money (recommended 10%) into your savings account before spending on needs and wants; paying yourself before you begin paying your monthly living expenses and making discretionary purchases

American Stock Exchange

Smaller American stock exchange in New York City

Needs

Something essential for survival such as food, clothing, or medical care.

Wants

Something that people desire but is not necessary for survival

Diversification

Spreading the risk among many types of investments

S&P 500

Standard and Poor's 500. A diverse index that includes 500 American companies that represent over 70% of the total market capitalization of the U.S. stock market

Securities

Stocks and bonds issued by corporations or by the government

Blue Chip Stock

Stocks of large, well-established corporations with a solid record of profitability. Investors choose them for relatively safe, stable, but moderate returns. IBM, Coca-Cola, etc...

Low credit rating

Suggests a high probability of default

Revolving credit

The ability to continuously borrow money up to a certain amount. When money is charged, the limit goes down. When the payments are made, the limit then goes back up. Any left-over balance at the end of the month will be charged in interest

Buying Power

The ability to purchase or invest, usually depending on income

Capacity

The ability to repay a loan

Consolidation loan

The act of combining several loans or liabilities into one loan

Usury

The act of lending money at an interest rate is considered unreasonably high or that is higher than the rate permitted by law.

Trade Off

The alternatives that we give up when we choose one course of action over another

Face Value

The amount a bondholder will be repaid at maturity

Deficit

The amount by which expenses exceed income or costs exceed revenues

Principal

The amount deposited on which interest will be paid; the total amount borrowed

Interest Rates

The amount earned (or charged), expressed as a percentage of principal

Surplus

The amount of an asset or resource that exceeds the portion that is utilized. A surplus often occurs in a budget, when expenses are less than the income taken in, or in inventory when fewer supplies are used than were retained.

Discretionary Income

The amount of an individual's income that is left for spending, investing or saving after taxes and personal necessities (such as food, shelter, and clothing) have been paid

Credit limit

The amount of credit that a financial institution extends to a client

Disposable Income

The amount of money that households have available for spending and saving after income taxes have been accounted for.

Volatility

The amount of uncertainty or risk about the size of changes in a security's value

Deductible

The amount you pay for a loss before the insurance company pays anything.

APR (Annual Percentage Rate)

The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents the actual yearly cost of funds over the term of a loan. This includes any fees or additional costs associated with the transaction.

Federal Reserve

The central bank of the United States; responsible for creating and tracking all of the money in circulation in the United States

Risk

The chance that an investment's value will decrease

Due date

The date on which a payment is due

Annual Deductible

The dollar amount you must pay each year before your insurance carrier will help pay your health care costs

Rate of Return

The gain or loss on an investment over a specified period, expressed as a percentage increase over initial investment cost.

FDIC

The government agency that insures customer deposits if a bank fails (currently insured up to $250k)

Time Value Of Money

The idea that money available at the present time is worth more than the same amount in the future due to its potential earning capacity; provided money can earn interest, any amount of money is worth more the sooner it is received.

Stock market

The market in which shares are issued and traded either through exchanges or over-the-counter markets.

Insurance Benefit

The payments your insurance provider guarantees to make after covered services under an insurance policy.

Finance charge

The total dollar amount of all interest and fees you pay for the use of credit

Credit score

The total of assigned points used to determine the likelihood that you will repay debt as agreed.

Investing

The use of long-term savings to earn a financial return

Opportunity Costs

The value of what you are willing to give up to achieve something else.

Treasury Bill

These bills (T-bills) are available for a minimum purchase of $100. The maturity date for these bills ranges from a few days to 52 weeks.

Treasury note

These notes (T-notes) are available for a minimum purchase of $100. Maturities are 2, 5, or 10 years. Higher interest rates than T-bills

Treasury Security

Three types U.S. Treasury Securities (Bills, Notes, and Bonds). These are taxed by the federal government but exempt from state and local

Common Stock

Type of stock that pays a variable dividend and gives the holder voting rights

Co-payment

Under managed care health insurance, the specific amount you pay for particular services, regardless of the cost of those services.

Stocks

Unit of ownership in a corporation

Under-insured

When an individual has an insurance policy that has an inadequate coverage.

Over Insured

When an individual has coverage for more than the value of the item that is insured.

Capital Loss

When the prices of stocks go down below the prices initially paid for it.

Payday Loan

a type of short-term borrowing that where an individual borrows a small amount at a very high rate of interest