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CreditThe
granting of money or something else of value in exchange for a promise of future repayment.
Credit
bureauAn
organization that compiles credit information on individuals and businesses and makes it available to businesses
for a fee.
Credit cardA plastic card from a financial services company
that allows cardholders to buy goods and services on credit.
Credit
ratingAn estimate of
the amount of credit that can be extended to an individual or business without undue risk.
Credit
reportA loan and
bill payment history, kept by a credit bureau and used by financial institutions and other potential creditors to
determine the likelihood a future debt will be repaid.
Credit
unionA cooperative
organization that provides financial services to its members.
CreditorA person, financial institution or other business that
lends money.
DebtMoney owed; also known as a liability.
Debt
servicePeriodic
payment of the principal and interest on a loan.
DebitCharges to an account.
Debit
cardA plastic card
similar to a credit card that allows money to be withdrawn or the cost of purchases paid directly from the holder's
bank account.
DelinquencyThe failure to make timely payments under a loan or other credit
agreement.
DiversificationThe distribution of investments among
several companies to lessen the risk of loss.
DividendA share of profits paid to a stockholder.
EquityOwnership interest in an asset after liabilities are
deducted.
Face
valueThe principal
amount of a bond, which will be paid off at maturity.
Fair market
valueThe price a
willing buyer will pay and a willing seller will accept for real or personal property.
Federal Deposit Insurance Corp.
(FDIC) A federally
chartered corporation that insures bank deposits up to $100,000.
Finance
companyA company
that makes loans to individuals.
Financing
feeThe fee a lender
charges to originate a loan. The fee is based on a percentage of the loan amount; one point is equivalent to 1
percent.
ForeclosureThe legal process used to force the payment of debt secured by
collateral whereby the property is sold to satisfy the debt.
401(k)
planA tax-deferred
investment and savings plan that serves as a personal retirement fund for employees.
General obligation
bondA type of
municipal bond backed by the full faith and credit of the governmental unit that issues it.
Individual development account
(IDA)A type of
savings account, offered in some communities, for people whose income is below a certain level.
Individual retirement account
(IRA)A retirement
plan, offered by banks, brokerage firms and insurance companies, to which individuals can contribute each year on a
tax-deferred basis.
Industrial
bondA financial
instrument issued by businesses primarily to fund expansion or acquisitions.
InterestA fee for the use of money over time. It is an expense to
the borrower and revenue to the lender. Also, money earned on a savings account.
Interest
rateThe percentage
charged for a loan, usually a percentage of the amount lent. Also, the percentage paid on a savings account.
InvestorAn organization, corporation, individual or other entity
that acquires an ownership position in an investment, assuming risk of loss in exchange for anticipated
returns.
Installment
planA plan requiring
a borrower to make payments at specified intervals over the life of a loan.
InvestingThe act of using money to make more money.
LeverageThe ability to use a small amount of money to attract other
funds, including loans, grants and equity investments.
LiabilityMoney an individual or organization owes; same as debt.
LienA creditor's claim against a property, which may entitle
the creditor to seize the property if a debt is not repaid.
LiquidityThe ease with which an investment can be converted into
cash.
LoadThe fee a brokerage firm charges an investor for handling
transactions.
LoanA sum of money lent at interest.
Managementfee The fee paid to a company for managing an investment
portfolio.
Market
valueThe amount a
seller can expect to receive on the open market for merchandise, services or securities.
MaturityThe time when a note, bond or other investment option comes
due for payment to investors.
Money market savings
accountA type of
savings account offered by a financial institution.
MortgageA temporary and conditional pledge of property to a
creditor as security for the repayment of a debt.
Municipal
bondA bond issued by
cities, counties, states and local governmental agencies to finance public projects, such as construction of
bridges, schools and highways.
Mutual
fundA pool of money
managed by an investment company.
Net
worthThe
difference between the total assets and total liabilities of an individual.
Par
valueThe
nominal, or face, value of a stock or bond, expressed as a specific amount on the security.
PretaxA person?s salary before state and federal income taxes are
calculated.
Predatory
lendingTargeting
loans to elderly, low-income and other people to take advantage of their financial status or lack of financial
knowledge.
Prime
rateThe lowest
interest rate on bank loans, offered to preferred borrowers.
PrincipalThe unpaid balance on a loan, not including interest; the
amount of money invested.
Promissory note
A written promise on a financial instrument to repay
the money plus interest.
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