ACH — Automatic clearing house, a method used to transfer funds to and from bank accounts.
APR (Annual Percentage Rate) — The cost of credit expressed in a yearly rate.
Bankruptcy — A legal proceeding entered by a borrower unable to pay back debts.
Cash advance — A source of cash for emergencies. Interest charged from the date advanced.
Charge off — A debt written off as uncollectible, but it remains collectable.
Checking account — Money kept in a bank for safekeeping. Withdrawn easily by check or ATM.
Collateral — An asset pledged to assure repayment of debt.
Compound interest — Interest computed on the loan balance, including unpaid interest.
Co-signer — An individual who signs a loan agreement and partly assumes responsibility.
Credit — The promise to pay an amount later for goods or services received now.
Credit bureau — An organization that compiles credit histories. Experian, TransUnion and Equifax.
Credit report — A history of debt repayment, outstanding debts, and late payments.
Debt — The amount owed to a lender.
Default — The failure to pay back a loan or meet the terms.
Direct Deposit — An electronic funds transfer directly to a bank account.
FDIC — Federal Deposit Insurance Corporation. Insures consumer deposits.
Fixed interest rate — A rate that will not change through the term of the loan.
Foreclosure — A legal process where pledged collateral can be sold if borrower defaults.
Installment loan — A loan with predetermined number of payments and amount.
Interest — A fee charged for borrowing money.
Lender — A business or person who lends or offers loans.
Loan — Any amount borrowed to be repaid later with interest.
Loan Agreement — A legal contract detailing conditions and terms of the loan.
Refinance — To pay off an existing loan with a new loan for a lower rate.
Secured loan — A loan backed by an asset that may be sold if not repaid.
Truth in Lending Act — A federal law requiring lenders to disclose actual loan costs.
Unsecured loan — A loan based on the borrower’s word to pay back.
Variable interest rate — An interest rate that changes based on a current index.