Amortization

Payment of a portion of the principle of a mortgage loan, reducing or amortizing the mortgage amount.

Annual Percentage Rate (APR)

The total annual percentage amount it will cost a person to use credit.

Asset

Any items of value that people own, including cash, property, personal possessions, and investments.

Bait and Switch

Baiting consumers with an advertised but nonexistent bargains and then switching them to a more expensive product.

Bank

An institution that handles savings and checking accounts, issues loans and credit, and deals in government and corporate issued securities.

Beneficiary

The person designated to receive the benefits of the policy upon the death of another individual.

Better Business Bureau (BBB)

A nonprofit, business-sponsored agency with local offices dedicated to educating consumers, helping to resolve disputes, and promoting honest business practices. (www.bbb.org)

Bounced Checks

A check that a bank returns because it is not payable due to insufficient funds - also called rubber check.

Broker

Registered individuals who sell securities to the public.

Budget

A plan for spending and saving money based on a person’s goals during a given time period.

Bureau of Consumer Protection

A federal agency (a division of the FTC) that provides state and local consumer protection to help answer consumer problems and enforce consumer protection and fraud laws.

Catastrophic Health Insurance

Often included in major medical insurance policies.  It covers the costs of intensive care, heart surgery, or long illness.

Claim

A formal request made to an insurance company for payment for a loss.

Closing Costs

Fees and charges for which a seller and buyer are responsible when a real estate transaction is completed; also known as settlement costs.

Collateral

A form of security to help guarantee that a creditor will be repaid

Collision Insurance

Will cover the cost of repairing your car if it is damaged in an accident with another vehicle.

Comprehensive Insurance

Covers your car if it is damaged by fire, flood, earthquake, hurricane, hail or collision with an animal.  It also covers losses if your car is stolen.

Consumer Bill of Rights

State of the Union Address of 1962-President John F. Kennedy

The right to safety - protection against the sale of products that are dangerous to life or health.

The right to choose - protection against practices that result in noncompetitive prices for goods and services available.

The right to be informed - protection against false and misleading advertising.

The right to be heard - guarantee of consumer representation in the deciding of government policy and enforcement of consumer protection laws.

Consumer Product Safety Commission  (CPSC)

A federal agency that which sets and enforces safety standards household appliances, toys, and tools. (www.cpsc.gov)

Contract

An agreement between two or more people that can be enforced by law.

Co-signer

Agreeing to be responsible for loan payments if the borrower fails to make them.

Credit

An arrangement to receive cash, goods, or services now and pay for them in the future.

Credit Bureau

Company that collects information about your credit history and sells it to lenders. (Equifax (www.equifax.com), Trans Union (www.transunion.com), Experian (www.experian.com)

Credit Card

A plastic card that can be used by the holder to make purchases or obtain cash advances using a line of credit made available by the card-issuing financial institution.

Credit Rating

A measure of a person’s ability and willingness to make credit payments on time.

Credit Report

A record that lists all past and present debts and the timeliness of their repayment; it documents an individual's credit history.

Credit Score

A number, generally between 300 and 800, that reflects the credit history shown in a borrower's credit report. This score is considered predictive of the borrower's future credit performance.

Credit Union

A cooperative financial institution, chartered by a state or federal government, which is member-owned. Credit Unions serve groups that share something in common, such as where they work, live, or go to church.

Credit Worthiness

This is determined before you are given the option to buy or get credit. The guidelines used to determine your credit worthiness are character, capacity, and capital.

Character - is established by your conduct and living habits.

Capacity - is your ability to earn enough income to repay.

Capital - is what you own.  It includes savings, investments, and property.

Creditor

An entity (bank, finance company credit union, business, or individual) to which money is owed.

Debt

The entire amount of money a person owes to lenders.

Default

Failure to repay a loan in accordance with the terms of the promissory note.

Deficiency Clause

A creditor can repossess, or take back, and resell goods.

Disability Income Health Insurance

Protects a person or family from loss of income due to illness or disabling injury.  It guarantees the continuation or a portion of the wage earner’s salary during the time he/she is unable to work.

Estate

All that a person owns, less debts owed, at the time of death.

Estate Planning

Preparing a plan for transferring property during one’s lifetime and at one’s death.

Expenses

Any money a person spends or gives away.

Federal Citizen Information Center (FCIA)

Assists federal agencies in the development, promotion, and distribution of practical consumer publications. (www.pueblo.gsa.gov/)

Federal Trade Commission (FTC)

A federal agency that protects consumers against false advertising, illegal sales schemes, and unfair trade practices. (www.ftc.gov)

Finance Charge

The total dollar amount a person pays to use credit.

Financial Planning

A blueprint or plan for managing all aspects of a person’s money.

Fixed Expense

Expenses that are the exact amount every time.

Food and Drug Administration (FDA)

A federal agency that sets and enforces safety standards for food, drugs, and cosmetics. (www.fda.gov)

Fraud

A deliberate deception, designed to secure unfair or unlawful gain.

Grace Period

The time between the billing date and the payment due date when no interest is charged.

Gross Income

Total income amount of income from wages or salary before payroll deductions.

Group Health Insurance

This is usually less expensive than individual policies.  The employer pays a share of the cost and sometimes all of it.

Identity Theft

Someone wrongfully acquires and uses a consumer’s personal identification, credit, or account information.

Income

Money that a person receives such as a paycheck from a job, an allowance from parents (inheritance), or interest earned on a savings account.

Installment Loans

A loan in which the amount of payment and the number of payments are predetermined, such as an automobile loan.

Insurance

Financial protection purchased to compensate for loss.

Insurance Policy

Insurance contract.

Insurance Rates

Rates are based on risk.  Risk is the chance of losing something.  An insurance company has greater risk when there is a greater chance of an accident. The greater the risk to an insurance company, the higher the rated it charges.

Rating Territories - Higher in cities, lower in rural areas.

Driver classification - Age, sex, marital status, how much you drive, and your driving record are considered in setting rates.

Age and type of car - Higher for cars that are more expensive to repair.  Rates are higher for sports cars than for sedans.

Coverage - The greater the coverage the higher the rate.

Interest

The amount paid for the use of borrowed money.

Interest Rate

The cost of borrowing money, expressed as a percentage, usually over a period of one year.

Late Fees

The fees that credit-card companies charge when you pay your bill past the due date.

Liability Insurance

Protects you whether you are driving or someone else is driving your car with your permission.

Living Trust

Transfer some property to a trustee, giving him/her instructions regarding it management and disposition while you are alive and after your death.

Loan

A sum of money given to an individual with the intent that it is to be repaid at some future date along with any agreed upon interest.

Major Medical Insurance

This covers many out-of-hospital costs.  It may also extend your basic policy and any additional days of hospital care.

Money Management

How a person manages money coming in and going out.

Monopoly

A company that has an unfair advantage over competitors in an area of business.

Net Income

The amount of a paycheck that a person can actually spend; gross income less any payroll deductions.

No-Fault Insurance

The driver's own insurance company pays for accident costs no matter who caused the accident.

Opportunity Cost

The value of what is given up when a person chooses one option over another.

Outstanding Check

A check that has been written but that has not cleared the bank.

Payment Methods

A means for accepting payment. The most common are credit card, electronic check, phone charge, corporate account, and invoice.

Payroll Deductions

Amounts subtracted from gross income that is withheld by an employer for items like taxes and employee benefits.

Permanent Life Insurance

Life insurance that provides a death benefit plus a savings plan and lasts for the policy holder’s lifetime.

Phishing

An e-mail scam that attempts to trick consumers into revealing personal information or use e-mail to "fish" the Internet hoping to hook people into giving their passwords and/or credit card information.

Premium

The amount of money you pay for your insurance.

Pretexting

The practice of getting your personal information under false pretenses and selling your information to people who may use it to get credit in your name, steal your assets, or to investigate or sue you.

Probate

A court supervised process of paying your debts and distributing your property to your heirs upon your death.

Promissory Note

The legal and binding contract signed between the lender and the borrower who states that the borrower will repay the loan as agreed upon in the terms of the contract.

Pyramid Schemes

A type of financial fraud in which people pay to join an organization in exchange for the right to sell memberships to others.

Reconcile

To check a financial account against another for accuracy.

Repossess

Forced or voluntary surrender of merchandise as a result of a consumer's failure to repay a loan as promised.

Risk

A situation in which some kind of loss is possible.

Risk Management

Procedures to minimize the adverse effect of a possible financial loss by: 1) identifying potential sources of loss; 2) measuring the financial consequences of a loss occurring; and 3) using controls to minimize actual losses or their financial consequences.

Rule of 72

Formula used to determine how long it takes for money to double in value.

Scam

Fraudulent or deceptive schemes.

Service Credit

A member's earned service, prior service, and purchased service.

Small Claims Court

A simple, inexpensive way to settle minor differences involving small amount of money. 

Student Loans

Student loans are loans offered to students to assist in payment of the costs of professional education. These loans usually charger lower interest than other loans, and are also usually issued by the government.  A student loan allows a person to finance their education and defer payments until after graduation.

Term Life Insurance

Life insurance that pays a death benefit if the policyholder dies within a specific time period but has no remaining value at the end of this time.

Trust

A legal document in which an individual (trustor) gives someone else control of someone else (trustee) control of property, for ultimate distribution to another person (beneficiary).

Underinsured

A person who carries insufficient insurance to pay for losses he/she is liable for.

Uninsured Motorist Insurance

Will cover you and your immediate family against injury by a hit-and-run driver or a driver who has no insurance.

Variable Expense

Expenses that fluctuate.

Warranty

A company's promise that its product will meet specific standards over a given time period or replace or refund.

Full Warranty:  A written promise that the company will repair or replace a defective or dissatisfied product at no charge.

Limited Warranty: May require the consumer to pay labor or handling charges.

Implied Warranty of Merchantability:  The product is what it is called and does what its name implies.

Implied Warranty of Fitness:  The product is fit for any performance or purpose promised by the seller.

Will

A legal document that tells how the decedent wishes his/her property to be distributed upon death.