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Words To Know

Vocabulary - Digging Out Of Debt

Annual Percentage Rate (APR)

The percentage cost of credit on an annual basis, which must be disclosed by law. Example 1: A $100 loan repaid in its entirety after one year with a $10 finance charge ($9 interest plus a $1 service fee) has an APR of 10%. Example 2: A $100 one-year loan with a $10 finance charge repaid in twelve equal installments (meaning the borrower has the use of less and less of the loan principal each month) has an APR of 18%. 

Check Card

Also known as a debit card. A debit card enables the owner to withdraw funds from a checking account sometimes this withdrawal can take place immediately.

Collection Agency

A business that specializes in obtaining payments from debtors who have defaulted on their loans.

Credit

An agreement to provide goods, services, or money in exchange for future payments with interest by a specific date or according to a specific schedule. The use of someone else’s money for a fee. (See Open-end credit, Closed-end credit, and Easy-access credit.) 

Credit Card

A plastic card that authorizes the delivery of goods and services in exchange for future payment with interest, according to a specific schedule.

Annual Fee

A fee for having an active credit card- most credit card providers no longer require an annual fee.

Billing Cycle

Interval between periodic billings for goods sold or services rendered, normally one month, or a system whereby bills or statements are mailed at periodic intervals in the course of a month in order to distribute the clerical workload evenly.

Disclosure Information

The giving of information, such as a companies past financial performance, either voluntarily or to be in compliance with legal regulations or workplace rules.

Finance Charge

The total dollar amount paid for credit. Example: A $100 loan repaid with $9 interest plus a $1 service fee has a finance charge of $10.

Grace Period

A time during which a borrower can pay the full balance of credit due and not incur finance charges or pay an insurance premium without penalty.

Late Fee

Also known as a late fine or a past due fee, is a charge levied against a client by a company or organization for not paying a bill or returning a rented or borrowed item by its due date.

Minimum Payment

Minimum amount that a consumer is required to pay on a revolving charge account in order to keep the account in good standing.

Over Limit Fee

A fee that is incurred when credit card users charge more than their credit limit on the card.  

Credit Counseling Service

An organization that provides debt and money management advice and assistance to people with debt problems.

Creditor

One who gives credit for money or goods; one to whom a debt is owing.

Credit Report

An official record of a borrower’s credit history, including such information as the amount and type of credit used, outstanding balances, and any delinquencies, bankruptcies, or tax liens.

Credit Score

A statistical measure of a loan applicant’s creditworthiness, which is the likelihood of repayment.

Debt

Something owed, usually measured in dollars.

Debit Card

A plastic card that provides access to electronic funds transfer (EFT) from an automated teller machine (ATM) or a point-of-sale (POS) terminal.

Interest Rate

The percentage of what you borrow that you pay in interest in a credit arrangement. In a savings account or CD, the interest rate is the percentage of your principal, or what you deposited, that you earn.

Loan

A thing lent; something the use of which is allowed for a time, on the understanding that it shall be returned or an equivalent given; esp. a sum of money lent on these conditions, and usually at interest.

Loan Deferment

A putting off; postponement, delay in repaying of a loan.

Loan Forbearance

An option that allows you to pay less than your normal monthly mortgage payment (or sometimes nothing at all) for a short period of time. For this option, you’ll typically have to show your lender that you’ll have the resources to catch up on your loan in the future.

Student Grant

A form of money that is intended for a specific purpose, such as housing, tuition etc.  The student is NOT required to pay the grant back.

Student Loan

A loan available to (undergraduate) students, freq. one funded or administered by the State.

Subsidized Loan

A subsidized student loan is a loan in which in general terms there is no interest added to the loan until it comes due for payment. A non-subsidized loan requires interest payments during the time a student is in school no principle payments are due until after leaving school.

Unsubsidized Loan

Unsubsidized loan terms dictate that you begin repaying the interest immediately even if you are in school.