Glossary

Annual Percentage Rate (APR) -- The cost of credit as a

yearly rate.

Appraisal Fee -- The charge for estimating the value of

property offered as security.

Asset -- Property that can be used to repay debt, such as

stocks and bonds or a car.

Automated Teller Machines (ATMs) -- Electronic terminals

located on bank premises or elsewhere, through which customers

of financial institutions may make deposits, withdrawals, or

other transactions as they would through a bank teller.

Balloon Payment -- A large extra payment that may be

charged at the end of a loan or lease.

Billing Error -- Any mistake in your monthly statement as

defined by the Fair Credit Billing Act.

Business Days -- Check with your institution to find out

what days it counts as business days under the Truth in Lending

and Electronic Fund Transfer Acts.

Collateral -- Property offered to support a loan and

subject to seizure if you default.

Cosigner -- Another person who signs your loan and assumes

equal responsibility for it.

Credit -- The right granted by a creditor to pay in the

future in order to buy or borrow in the present; a sum of money

due a person or business.

Credit Bureau -- An agency that keeps your credit record.

Credit Card -- Any card, plate, or coupon book used from

time to time or over and over again to borrow money or buy

goods or services on credit.

Credit History -- The record of how you've borrowed and

repaid debts.

Creditor -- A person or business from whom you borrow or

to whom you owe money.

Credit-related Insurance -- Health, life, or accident

insurance designed to pay the outstanding balance of debt.

Credit Scoring System -- A statistical system used to rate

credit applicants according to various characteristics relevant

to creditworthiness.

Creditworthiness -- Past and future ability to repay

debts.

Debit Card (EFT Card) -- A plastic card, looks similar to

a credit card, that consumers may use to make purchases,

withdrawals, or other types of electronic fund transfers.

Default -- Failure to repay a loan or otherwise meet the

terms of your credit agreement.

Disclosures -- Information that must be given to consumers

about their financial dealings.

Elderly Applicant -- As defined in the Equal Credit

Opportunity Act, a person 62 or older.

Electronic Fund Transfer (EFT) Systems -- A variety of

systems and technologies for transferring funds electronically

rather than by check.

Finance Charge -- The total dollar amount credit will

cost.

Home Equity Line of Credit -- A form of open end credit in

which the home serves as collateral.

Joint Account -- A credit account held by two or more

people so that all can use the account and all assume legal

responsibility to repay.

Late Payment -- A payment made later than agreed upon in a

credit contract and on which additional charges may be imposed.

Lessee -- A person who signs a lease to get temporary use

of property.

Lessor -- A company that provides temporary use of

property usually in return for periodic payment.

Liability on an Account -- Legal responsibility to repay

debt.

Open-End Credit -- A line of credit that may be used over

and over again, including credit cards, overdraft credit

accounts, and home equity lines.

Open-End Lease -- A lease which may involve a balloon

payment based on the value of the property when it is returned.

Overdraft Checking -- A line of credit that allows you to

write checks or draw funds by means of an EFT card for more

than your actual balance, with an interest charge on the

overdraft.

Point-of-Sale (POS) -- A method by which consumers can

pay for purchases by having their deposit accounts debited

electronically without the use of checks.

Points and Origination Fees -- Points are finance charges

paid at the beginning of a mortgage in addition to monthly

interest. One point equals one percent of the loan amount. An

origination fee covers the lender's work in preparing your

mortgage loan.

Punitive Damages -- Damages awarded by a court above

actual damages as punishment for a violation of law.

Rescission -- The cancellation or "unwinding" of a

contract.

Security -- Property pledged to the creditor in case of a

default on a loan; see collateral.

Security Interest -- The creditor's right to take property

or a portion of property offered as security.

Service Charge -- A component of some finance charges,

such as the fee for triggering an overdraft checking account

into use.

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