Loan Glossary
Assets
Personal possessions of value, including cash, real estate and investments.
Balance Transfer
The process of moving an unpaid credit card debt from one issuer to another.
Bankruptcy
A legal proceeding that protects a debtor from legal action by some creditors. There are two basic ways of filing for personal bankruptcy.
Cashier’s Check
A check drawn by a bank on itself, signed by a cashier or bank officer and payable to a third party named by the customer.
Checks Returned with Statement
All original canceled checks are returned to the account holder in monthly statement.
Debit Card
A payment card that is linked directly to a customer’s bank account. Some cards require a personal identification number. Others require a customer’s signature. A PIN-based or direct debit card removes a purchase price from a customer’s checking account almost immediately.
Direct Deposit
An automatic deposit of wages or benefits to a customer’s bank account.
Electronic Funds Transfer
The transfer of money between accounts by consumer electronic systems such as automated teller machines (ATMs), and electronic payment of bills.
Federal Savings and Loan Insurance Corporation
A federal institution that insures deposits of federally chartered savings and loan associations.
Home Equity
The part of a home’s value that the mortgage borrower owns outright; the difference between the fair market value of the home and the principal balances of all mortgage loans.
Home Equity Line of Credit
A home equity line of credit is an open-ended loan, paid as revolving debt, that is backed by the portion of the home’s value that the borrower owns outright. Interest paid on a home equity line of credit is usually deductible.
Insufficient Funds
When funds are not enough to satisfy the payment of a check or draft made on that account; also known as not sufficient funds (NSF).
Joint Account
A bank account owned by two or more persons who share equally in the rights and liabilities of the account.
Mortgage
A legal agreement that uses property as collateral to secure payment of a debt. The legal agreement means that when a mortgage is on a house, the lender can take possession of the house if the borrower stops making payments.
Overdraft
The amount that a check exceeds the available balance in the payor’s account; also insufficient funds.
PC Banking
A service that allows a bank customer to obtain account information and perform certain bank transactions through a personal computer.
Personal Loan
A personal loan is a loan from a lender that is not secured by any property. Rates tend to be similar to those of credit cards, which are another type of unsecured loan.
Prime Rate
The interest rate a bank charges its best or “prime” customers. Each bank will quote a prime lending rate.
Revolving Credit
A line of credit that does not have a specified repayment schedule but may require a minimum payment to cover interest and contribute to paying off principal.
Unsecured Loan
An advance of money that is not secured by collateral.
Variable Rate
Percentage a borrower pays for the use of money, usually expressed as an annual percentage, and which fluctuates in tandem with a rate index.
Personal Loan - Cash Advance - Auto Loan - Home Loan - Credit Card - Credit Report - Debt