MoneyU Glossary of Terms


MoneyU Glossary of Terms


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C

Capacity

Mental or physical ability for something or to do something.

Capital

Economic resource or resources that can be used to generate economic wealth.

Cardmember Agreement

The issuerÔÇÖs written statement of terms and conditions relating to your credit card account. The Cardmember Agreement is required by Federal Reserve regulations. The Agreement states that the annual percentage rate, the monthly minimum payment formula, annual fee, if applicable, and your rights in billing disputes.

Career

Pattern of activities and positions involved in an individualÔÇÖs lifetime of work to which the person has made a long-term commitment.

Cash Advance

A cash loan taken out on a credit card. Interest for cash advances is usually higher than it is for purchases, a transaction fee may apply, and the grace period may be waived.

Cash Advance Fee

A one-time fee for cash advances in addition to normal finance charges. This fee is usually a percentage of the advance amount.

Cash Inflows

Cash inflows are dollars (or relevant currency) that you receive on an investment. Cash inflows are a payback, or source of cash, on an investment. Cash outflows, o the other hand, are dollars (or relevant currency) that you spend or invest in order to earn a rate of return. Cash outflows are uses of cash. The interest rate that equates the cash inflows and outflows for a project, even one extending many years, is called the internal rate of return.

Cash Outflows

Cash outflows are dollars (or relevant currency) that you spend or invest in order to earn a rate of return. Cash outflows are uses of cash. Cash inflows, on the other hand, are dollars (or relevant currency) that you receive on an investment. Cash inflows are a payback, or source of cash, on an investment. The interest rate that equates the cash outflows and inflows for a project, even one extending many years, is called the internal rate of return.

Certificate of Deposits

A savings certificate entitling the bearer to receive interest.

Certificates of Deposit

(Also known as CDs.) Certificates of deposit, or CDs, are time deposits. CDs offer a guaranteed rate of interest for a specified term, such as one year. With CDs, you can choose from among various lengths of time that your money is on deposit, ranging from several days to several years. Once you pick the term you want, you will generally have to keep your money in the account until the term ends.

Chapter 13 Bankruptcy

A type of consumer bankruptcy under which the debtor doesn't forfeit personal property but agrees to a three- to five-year wage-earner plan to repay all or part of their debt. A Chapter 13 bankruptcy remains on a credit report for seven years.

Chapter 7 Bankruptcy

The most common form of consumer bankruptcy, Chapter 7 typically releases a debtor from all liability for the accounts included in a bankruptcy. In exchange, the debtor must forfeit some personal property. A Chapter 7 bankruptcy remains on the debtor's credit report for 10 years.

Character

Refers to trustworthiness; one of three factors in credit scoring (e.g., paying bills on time shows financial responsibility). Creditworthiness indicating a responsible attitude toward living up to agreements.

Charge Card

A charge card requires you to pay your bill in full each month, but charges no interest. The user pays an annual fee.

Charged Off

A term on your credit report that means that the creditor attempting to collect a particular debt gave up and is no longer trying to get payment from you.

Charity

The voluntary provision of money, materials, or help to people in need.

Check

Written order directing a bank or credit union to pay a person or business a specific sum of money.

Checking Account

An account with which you write checks to withdraw your deposited funds from the account

Closed-End Mutual Fund

A mutual fund with a fixed number of shares that may be bought and sold like a stock.

Co-Sign

To sign a credit agreement with someone and agree to share the debt with that person, or assume the debt if the other person defaults, or doesn't pay.

Co-Signer

A parent (or any person over 18 years old) who agrees to share credit responsibilities with you and pay debts.

Codicil

A document used to modify an existing will. A codicil must be executed with all of the same legal formalities required for a will. If you wish to make changes to your will, you should seek the advice of an attorney who practices in the area of estate planning to determine if it is better to execute a codicil or make a totally new will.

Collateral

Savings, bonds, insurance policies, jewelry, property or other items that are pledged to pay off a loan or other debt if payments are not made according to the agreement. (Also called Security.)

Collection

The referral of a past due account to a specialist in collecting loans or accounts receivable.

Collection Agency

If you fail to pay a credit or charge card bill, the card issuer may send your overdue bill to a collection agency, a company that attempts to obtain payment from you. If this happens, your account may be listed as a "collection account" on your credit report. If you do not pay your bill and your card issuer has to go to a collection agency to attempt to obtain payment from you, you may be liable for the cost of the collection agency's services. Check your cardholder agreement to see if your card includes this potential fee.

Commission

The amount charged by brokerage firms to purchase or sell securities.

Common Stock

An equity share in the ownership of a company. There is no guarantee that the money paid for the stock will be returned or that there will be any dividends paid. Common stockholders are last in line if the company is unable to pay its obligations.

Community Property

Some states treat property in a marriage as owned equally by both spouses, even if titled in only one spouse's name. Therefore property distribution rules are different concerning the percentage the surviving spouse and others will receive. If you have ever resided in a community property state, you should consult the local rules; however, couples can agree ahead of time as to the distribution of property and need to file appropriate legal documents in support of the agreement. Also, property acquired in a community property state may maintain its community property status even if the couple moves to a noncommunity property state.

Comparison Shopping

Comparing the price of an item at various places, allowing you to get the item for the least amount of money. Comparison shopping is especially easy to do online, using the Internet.

Compound Interest

Interest earned on interest. When interest is earned on an investment and that interest is reinvested, it becomes part of the principal of that investment. The next interest calculation is based on this increased principal. Compound interest results in a higher future value than simple interest. See also Rule of 72.

Consolidation Loan

A loan obtained in order to combine multiple debts into one, typically at a lower interest rate. (Also called Debt Consolidation.)

Consumer

Buyers or users of goods and services for personal use.

Consumer Protection Act

A revision of bankruptcy law intended to make the system fairer for creditors and debtors and make affordable credit available to more people.

Contract

Legally enforceable written or oral agreement between two or more parties to do or not do something.

Convenience Account

An account where the owner adds another person to his or her account solely for the purpose of signing privileges-no survivorship rights are assumed.

Conventional Loan

A mortgage loan that is not insured or guaranteed by a government agency such as the FHA (Federal Housing Administration), the VA (Veterans Administration), or the Rural Development Services (formerly known as Farmers Home Administration, or FmHA).

Cost of Living

The average cost of the basic necessities of life, such as food, shelter, and clothing; some locations, like New York and Los Angeles, have relatively high costs of living compared to the average.   It is important to take the Cost of Living into account when considering job pay in various locations.

Cost of Living Index

An inflationary indicator that measures the change in the cost of a fixed basket of products and services, including housing, electricity, food, and transportation. A rise in the cost of living reflects the rate of inflation. The cost-of-living index is published monthly. Also called Consumer Price Index (CPI).

Cost/benefit analysis

Tool used to choose among alternatives involves weighing the cost of a product or service against the benefit it will provide.

Coverdell Education Savings Account

A deposit or investment account that provides tax benefits to help accumulate funds for education.

Credit

An amount of money a bank or credit card issuer lends to you. You can charge/spend any amount from your credit line to make purchases or take cash advances. As long as you pay the minimum amount due each month by the due date, you can continue to use your remaining available credit.

Credit Bureau

A credit bureau keeps a record of your credit history for any card or loan issuer to review when considering your application for credit. The three major credit reporting agencies in the United States are Equifax, Experian (formerly TRW) and Trans Union.

Credit Card

A credit card allows you to make partial payments for purchases, but charges interest on the amount owed. You can pay your balance off in full to avoid interest payments. Banks and other card issuers set interest rates and fees.

Credit Card Bill of Rights

An amendment to the Truth in Lending Act to establish fair and transparent practices relating to the extension of credit under an open end consumer credit plan.

Credit Card Debt

The total unpaid balances on all your credit cards.

Credit Counseling

An organization that provides debt and money management advice and assistance to people with debt problems. Not all credit counseling firms are reputable, and some might actually make your debts and credit worse.

Credit Criteria

Factors used by lenders to rate the credit worthiness or ability to repay debt. This includes income, the amount of personal debt, the number of accounts from other credit sources, and credit history. A lender can use any credit-related information in approving or denying a credit application as long as they do not violate the Equal Credit Opportunity Act that prohibits credit discrimination on the basis of race, sex and other factors.

Credit History

A record of how a consumer has paid credit accounts in the past. It is used as a guide to determine whether or not the consumer is likely to pay future accounts on time.

Credit Limit/Credit Line

Your credit limit is the maximum amount you may charge on a credit card or you can carry on an account. Some card issuers set a separate limit for purchases and cash advances. Many banks allow you to spend more than your credit limit, but charge you a fee for doing so. It is up to you to keep track of your credit limit and how much available credit you have left.

Credit Management

The way you handle the money you borrow from banks or credit issuers.

Credit Repair Organizations Act

Guidelines that credit repair services are required to follow in order to protect you.

Credit Report

An official record of a borrowerÔÇÖs credit history, including such information as the amount and type of credit used, outstanding balances, and any delinquencies, bankruptcies, or tax liens. A report that a prospective lender or employer obtains from a consumer reporting agency that displays the manner in which a consumer has met his or her past credit obligations. It is used to help determine creditworthiness of the potential borrower.

Credit Risk

The risk that money loaned to another will not be repaid. Obligations of the U.S. Government are considered to have no credit risk.

Credit score

A measure of creditworthiness based on an analysis of the consumerÔÇÖs financial history, often computed as a numerical score, using the FICO or other scoring systems to analyze the consumerÔÇÖs credit. A creditorÔÇÖs evaluation of a personÔÇÖs willingness and ability to pay debts as judged by character, capacity, and capital; a mathematical model used by lenders to predict the likelihood that bills will be paid as promised.

Credit Union

A not-for-profit financial institution that is owned by its members. Credit unions offer many of the same services as banks at lower costs. They may also pay higher interest on deposits. To open an account at a credit union, you must qualify for membership.

Credit Union Account

Credit union accounts are similar to those at banks, but have different names. Credit union members have share draft (rather than checking) accounts, share (rather than savings) accounts, and share certificate (rather than certificate of deposit) accounts.

Creditworthiness

A measure of oneÔÇÖs ability and willingness to repay a loan; qualified to have credit.

Creeping Indebtedness

The gradual rising of debt.

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