Chapter 5,6, 7, 18

Automatic Teller Machine (ATM)

A computer terminal used to conduct banking transactions; also called a cash machine

Single-Premium Deferred Annuity

A deferred annuity purchased with a lump sum

Trust

A legal agreement that provides for the management and control of assets by one party for the benefit of another.

Consumer Credit Counseling Services (CCCS)

A local, nonprofit organization that provides debt counseling services for families and individuals with serious financial problems

Debit Card

A plastic access card used in computerized banking transactions; also called a cash card

Compounding

A process that calculates interest based on previously earned interest.

Share Account

A regular savings account at a credit union

Credit Union

A user-owned, nonprofit, cooperative financial institution that is organized for the benefit of its members.

Asset Management Account

An all-in-one account that includes savings, checking, borrowing, investing, and other financial services for a single fee; also called a cash management account

Overdraft Protection

An automatic loan made to checking account customers to cover the amount of checks written in excess of the available balance in the checking account

Share Draft Account

An interest-bearing checking account at a credit union

Deferred Annuity

Annuity that provides income payment starting at some future date

Immediate Annuity

Annuity that provides income payments at once; usually purchased with a lump-sum payment

Equal Credit Opportunity Act (ECOA)

Bans discrimination in the extension of credit on the basis of race, color, age, sex, marital status, and other factors

closed-end credit

One-time loans that the borrower pays back in a specified period of time and in payments of equal amounts

Credit Card Accountability, Responsibility, and Disclosure Act

Places new restrictions on credit card lending and eliminates certain fees

Consumer Credit Reporting Reform Act

Places the burden of proof for accurate credit information on the credit reporting agency

interest

a periodic change for the use of credit

adjusted balance method

the assessment of finance charges after payments made during the billing period have been subtracted

capital

the borrower's assets or net worth

character

the borrower's attitude toward his or her credit obligations

finance charge

the total dollar amount paid to use credit

consumer credit

the use of credit for personal needs (except at home mortgage)

Mutual Savings Bank

A financial institution that is owned by depositors and specializes in savings accounts and mortgage loans.

Commercial bank

A financial institution that offers a full range of financial services to individuals, businesses, and government agencies

Savings and Loan Association (S&L)

A financial institution that traditionally specialized in savings accounts and mortgage loans.

Money Market Account

A savings account offered by banks, savings, and loan associations, and credit unions that requires a minimum balance and has earnings based on market interest rates.

Certificate of Deposit (CD)

A savings plan requiring that a certain amount be left on a deposit for a stated time period to earn a specified interest rate.

Money Market Fund

A savings-investment plan offered by investment companies, with earnings based on investments in various short-term financial instruments.

Chapter 13 bankruptcy

A voluntary plan that a debtor with regular income develops and proposes to a bankruptcy court

Rate of Return

The percentage of increase in the value of savings as a result of interest earned; also called yield

Annual Percentage Yield (APY)

The percentage rate expressing the total amount of interest that would be received on a $100 deposit based on the annual rate and frequency of compounding for a 365-day period.

annuity

a contract that provides an income for life

Truth in lending law

a federal law that requires creditors to disclose the annual percentage rate (APR) and the finance charge as a dollar amount

Fair Debt Collection Practices Act (FDCPA)

a federal law, enacted in 1978, that regulates debt collection activities

open-end credit

a line of credit in which loans are made on a continuous basis and the borrower is billed periodically for at least partial payment

home equity loan

a loan based on the current market value of a home less the amount still owed on the mortgage

rule of 78s

a mathematical formula to determine how much interest has been paid at any point in a loan term

previous balance method

a method of computing finance charges that gives no credit for payments made during the billing period

average daily balance method

a method of computing finance charges that uses a weighted average of the account balance throughout the current billing period

Add-on interest method

a method of computing interest in which interest is calculated on the full amount of the original principle

declining balance method

a method of computing interest when more than one payment is made on a simple interest loan

Reverse Annuity Mortgage (RAM)

a mortgage in which the lender uses the borrower's house as collateral to buy an annuity for the borrower from a life insurance company; also called an equity conversion

defined-benefit plan

a plan that specifies the benefits of the employee will receive at the normal retirement age

401k (TSA) plan

a plan under which employees can defer current taxation on a portion of their salary

Keogh plan

a plan which tax-deductible contributions fund the retirement of self-employed people and their employees; also called a self-employed retirement plan

defined-contribution plan

a plan- profit sharing, money purchase, Keogh or 401(k)- that provides an individual account for each participant; also called an individual account plan

revolving check credit

a prearranged loan from a bank for a specified amount; also called a bank line of credit

credit bureau

a reporting agency that assembles credit and other information about consumers

Individual Retirement Account (IRA)

a special account in which the employee sets aside a portion of his or her income; taxes are not paid on the principal or interest until money is withdrawn from the account

collateral

a valuable asset that is pledged to ensure loan payments

credit

an arrangement to receive cash, goods, or services now and pay for them in the future.

vesting

an employee's right to ay least a portion of the benefits accrued under an employer pension plan, even if the employee leaves the company before retiring

credit insurance

any type of insurance that ensures repayment of a loan in the event the borrower is unable to repay it

simple interest

interest computed on principal only and without compounding

Chapter 7 bankruptcy

one type of personal (or straight) bankruptcy in which many debts are forgiven

fair credit reporting act

regulates the use of credit reports, requires the deletion of obsolete information, and gives consumers access to their files and the right to have erroneous data corrected

capacity

the borrower's financial ability to meet credit obligations

line of credit

the dollar amount, which may or may not be borrowed, that a lender makes available to a borrower

conditions

the general economic conditions that can affect a borrower's ability to repay a loan

annual percentage rate (APR)

the percentage cost (or relative cost) of credit on a yearly basis. The APR yields a true rate of interest for comparison with other sources of credit.

Fair Credit Billing Act (FCBA)

Sets procedures for promptly correcting billing mistakes, refusing to make credit card payments on defective goods, and promptly crediting payments