Financial Glossary
ABA Routing # - A 9 digit number that is unique to identifying a financial institution. University Federal Credit Union's routing number is 324079416.
Automated Clearing House (ACH) - A computer-based interchange for clearing deposits and payments electronically.
Account - A recorded history of a person's debit and credit transactions
Adjustable Rate Mortgage- A home loan where the interest rate will adjust over the life time of the loan.
Assets- Items owned by an individual or company that have a monetary value.
Annual Percentage Rate (APR)- The cost of credit for personal loans, expressed as a percentage per year.
Annual Percentage Yield (APY)- The amount of dividends earned on a deposit account (checking, savings, Certificate Accounts, IRAs), including the effect of dividend compounding, assuming funds remain in the account for one year.
Automated Teller Machine (ATM)- A machine at a financial institution branch or other location which enables a customer to perform basic banking activities. (balance inquiries, withdrawing or transferring funds, etc.)
Average Balance- The average amount in a deposit account that equals the sum of the daily balances during an accounting period, usually a month, divided by the number of days in the period. Can sometimes be used to avoid service charges or to qualify for special services. See also, minimum daily balance.
Audit- An evaluation of a financial institutions assets, expenses, liabilities, income and operations to reduce fraud and errors.
Automatic Deposit- An arrangement that authorizes a check to automatically deposit into a member's account (usually checking or savings) electronically.
Automatic Payment- An arrangement that authorizes payments to be deducted automatically from your account (usually checking or savings) to pay bills (such as insurance payments, rent, mortgage or loan payments). Payments are usually scheduled to be made on a certain day of the month.
Automatic Transfer- An arrangement that moves funds from one account to another (within the Credit Union) automatically on a pre-arranged schedule; for example, every payday or once a month.
Balance- The amount remaining in an account after the totals of debits and/or credits.
Bankrupt- A debtor who is legally insolvent.
Beneficiary- An individual who receives income from an account upon the account owners' death.
Board of Directors- Volunteers who oversee the activities for the Credit Union. To serve on the Board of Directors, volunteers must be a member of the Credit Union and be elected by the members of the Credit Union.
Branch- A Credit Union location where members can conduct their financial transactions and/or business.
Canceled Check- A check written by a member that has been paid and subtracted from their account.
Cash Advance- A cash loan that is accessed by using a member's line of credit.
Certificate Account- A deposit with a maturity date that generally pays higher dividend rates than other types of deposit accounts. Maturities can range from six months to five years. Insured by the NCUA up to the maximum allowed by law. A penalty may be assessed if funds are withdrawn before the maturity date.
Certified Check- A guaranteed check which the funds are immediately withdrawn.
Closing Costs- Expenses involved in transferring ownership of real estate.
Collateral- An approved asset that is held for security for the repayment of a loan.
Compounding- Dividends added to dividends previously earned on a principal balance. The more frequently dividends are compounded, the higher the effective yield.
CO-OP- The largest credit union only ATM Network in the country. Provides Surcharge-Free access to 28,000 ATMs.
Consolidate- Combining all debts into one.
Co signer- A secondary person who signs a credit application with the primary applicant and accepts responsibility for the repayment of the loan.
Credit- A financial term that refers to an increase in a deposit account (such as a deposit made to the account). See also, debit.
Credit Card- A plastic card issued to an individual for the purpose of purchasing goods and services using credit; a credit limit is established for each card holder. Like debit cards, credit cards are issued by the Credit Union and are accepted anywhere VISA is.
Credit Limit- The maximum amount that can be spent on a line of credit or a revolving charge account.
Credit Report- A report that holds credit information on you that is maintained by a consumer reporting company.
Credit Score- A qualification used by lenders to determine whether an individual is fit to receive credit.
Credit Union- A member owned financial institute. Credit Unions are not for profit which allows them to offer better rates compared to other types of financial institutions.
Debit- A financial term that refers to a decrease in a deposit account, such as writing a check against the account. See also, credit.
Debit Card- A plastic card issued by the Credit Union which members can use to pay for purchase anywhere VISA is accepted; money is immediately deducted from a designated checking account. Can also be used at ATMs.
Debt- Monies that are owed by an individual or company.
Deposit- Money that is deposited into a member's account that increases the balance.
Direct Deposit- Electronic deposit of wages or benefits, such as pension or social security, into a member's account; deposits are handled through the ACH. See also automatic deposit.
Dividends- Credit unions generally use the term "dividends" to refer to interest payments they make to depositors. These are not dividends in the normal sense and are not taxed as such; they are just interest payments. Credit unions call them dividends because, technically, credit unions are owned by their members, and the interest payments are therefore payments to owners.
Dividend Rate- The rate paid on a dividend-bearing account; such as savings, Certificate Accounts and some checking accounts. Different types of accounts and loans pay or charge different rates of interest. See also, Annual Percentage Yield.
Dividend Transfer- A process that allows dividends earned in one account to be transferred to another account. For example, dividends earned on a Certificate Account can be automatically transferred at maturity to a designated share account.
eStatements- Financial statements that are delivered electronically to your email and can be accessed online.
Escrow- Property or Money held by a third party until the conditions of a contract is met.
Field of Membership- Those individuals who are eligible for membership at the Credit Union.
Financing- The means to provide or raise funds or capital for a physical item
Fixed Interest Rate Mortgages- A home loan where the interest rate remains the same for the loan term.
Foreclosure- The act of legally taking mortgaged property.
Fixed Expenses Expenses- that must be paid every month or at other regular time periods. They include such things as rent, mortgage, car loans and insurance premiums.
Fixed Rate- A rate of interest charged for a loan or paid to a dividend bearing deposit account that does not vary for the term of the loan or deposit. See also, variable rate.
Grace Period- A specified amount of time for a debtor to make a contractual payment without being penalized, ie loan payment.
Guaranteed Asset Protection (GAP)- The GAP program waives the difference between your insurance carrier's settlement and the loan balance.
Home Equity Line of Credit (HELOC)- A line of credit secured by the equity in a home. Can be used for home improvements, debt consolidation and other major purchases and expenses. Interest paid on the loan is generally tax deductible (consult a tax adviser about interest deductibility). Upon approval, a credit line limit is established; in most cases, the borrower can tap into the credit line by writing line of credit checks or getting an advance. See also, home equity loan.
Home Equity Loan- A loan secured by the equity in a home. Can be used for home improvements, debt consolidation and other major purchases or expenses. Interest paid on the loan is generally tax deductible (consult a tax adviser about interest deductibility). Upon approval, money is paid in a lump sum. See also, home equity line of credit.
Rate- The rate charged on a loan or line of credit. Different types of loans charge different rates of interest. See also, annual percentage rate; dividend rate.
Joint Account One account that has been opened with more than one individual named.
Lien- An asset held in exchange for secured debt financing.
Line of Credit- A fixed amount of money that can be drawn against from a lender. A line of credit is applied for with a lending institution just like applying for a loan.
However, unlike a loan, the borrower only pays interest on the amount actually used. A line of credit is usually for an unlimited period of time. Periodic payments are made against what has been borrowed, generally at least equal to the interest on the loan.
Loan to Value- A risk assessment ratio lenders use when lending money to a borrower to purchase property.
Maturity Date- Date when share, bond or other instrument comes due for payment.
Member- An individual who has an account at the Credit Union.
Minimum Daily Balance- The minimum amount that may be required to be kept in an account each day to earn dividends, avoid a service charge or qualify for special services. See also, average balance.
Money Market- A high yield investment account that keep funds liquid for easy access.
Mortgage- A long term home loan where a series of payments are made to the creditor for a specific amount of time.
Manufacture Suggested Retail Price (MSRP)- The recommended sales price on a product.
NCUA - National Credit Union Administration- Independent federal agency that charters and supervises federal credit unions and insures the savings of account holders in all federal credit unions and many state-chartered credit unions to at least $250,000.
NSF - Nonsufficient or Insufficient Funds- A situation in which a check (or other type of withdrawal) may not be paid because the balance in the account is less than the amount of the check. See also, overdraft.
Online Banking- A service that allows an account holder to obtain account information and manage certain banking transactions through a personal computer.
Origination Fees- A payment made to the lender for providing services associated with opening a loan.
Overdraft- When the amount of a paid check or other withdrawal exceeds the available balance in a checking account. See also, NSF and overdraft protection.
Overdraft Protection- A service that allows a checking account to be linked to another account that provides protection against returned items or overdrafts. Choices can include using a savings account, an approved line of credit, or account to provide protections.
Phone Banking- A service that allows an account holder to obtain account information and manage certain banking transactions by calling our Member Service Center.
Point of Sale (POS)- Software that automates the process when the sale of goods or service to the customer occurs, often at a checkout counter. Money is immediately deducted from a designated checking account when member uses their PIN number.
Pre-Approved- A credit offer that has been extended to a borrower prior to the borrower going out to purchase a product.
Principal- The original amount of money that was loaned or invested.
Refinance- To revise a current loan agreement with another agreement under different terms. Usually provides a lower interest rate than that of current loan.
Repossession- To take possession of an item that a borrower has purchased when a payment default has occurred.
Revolving Charge Account- A credit account for which the user has the option to pay the bill in full or to spread repayment over several months.
Canceled Check- An Individual Retirement Account (IRA) that can have tax-free earnings and withdrawals when certain conditions are met.
Secured Loan- A loan that has been backed by some sort of collateral that provides a low risk to the financial institution and ensures payment.
Share- A credit union functions differently than a conventional bank; in a credit union, every member is also a partial owner. Because credit unions are cooperatively owned, members do not make deposits, but rather purchase shares. Shares do not earn interest, but instead earn dividends.
Signature Loan- A loan that has no collateral backing the loan.
Switch Kit- Provides the necessary authorization forms to help you easily switch your deposit accounts from one financial institution to another.
Traditional IRA- An Individual Retirement Account (IRA) that has the potential of having tax-deductible contributions.
Transaction Limitations- Refers to a Federal Reserve regulation that limits certain types of withdrawals from savings and money market savings accounts. There can be no more than six automatic, wire or telephone transfers out of the account each month; of the six, if applicable, no more than three can be by check, draft, debit card or similar payment order to a third party. Withdrawals at ATMs and teller windows from these accounts are unlimited. (if applicable)
Transfer- The act of moving monies from one account/share to another account/share.
Uncollected Funds- Refers to items deposited in an account that have not yet been collected, or paid, by the bank on which they were drawn.
Unsecured- A loan that has not been backed by collateral, see Signature Loan.
Variable Expenses- Expenses which may vary month-to-month and over which you may have considerable control. These expenses include food, clothing, entertainment and transportation.
Variable Rate- An interest rate that may fluctuate during the term of a loan, line of credit or deposit account according to changes in an index rate, such as the prime rate or other prescribed criteria. See also fixed rate.
Wire Transfer- An electronic payment service for transferring funds by wire (for example, through the Federal Reserve Wire Network or the Clearing House Interbank Payments System).
Withdrawal- The act of taking monies from an account which decreases the balance.
