A GLOSSARY OF CREDIT UNION TERMS

-A -B -C -D -E -F -G -H -I -J -L -M -N -O -P -R -S -T -U -V -W

-A-

ABA Routing and Transit Number
The routing and transit Number (ABA) number is the nine-digit number found on the bottom of a check or deposit slip. CommonWealth's ABA number is: 321176794.
Advance
A transfer of funds from a lender to the borrower in advance on a loan.
Affidavit
A written statement made under oath before an authorized official.
Amortize
The gradual elimination of a liability, such as mortgage through regular payments over a specified period of time which must be sufficient to cover both the principal and the interest.
Annual Percentage Rate (APR)
Finance charge over a full year, expressed as a percentage reflecting all costs of the loan.
Annual Percentage Yield (APY)
The total amount of dividends that are projected for an account based on the dividend rate and the frequency of compounding for a 365 day period, or the number of days in the term.
Appraisal
An estimate of value of property.
Appraisal Fee
Charge for estimating the value of collateral being offered as security.
Assignee
A person to whom a transfer is being made.
Assignment
Transfer of a note or property legally from one party to another.
Assignor
The maker or originator of an assignment.
Automatic Funds Transfer (AFT)
A procedure which allows the transfer of savings account funds to demand deposit accounts, and essentially authorizes payment of interest on transaction accounts.
Average Daily Balance
An amount calculated by adding together all the daily balances of the billing cycle and dividing the sum total by the number of days within that cycle.

-B-

Balance Transfer
The process of transferring a balance from one account to another account.
Balloon Note
A loan in which the final payment is considerably higher than the other regular payments.
Balloon Payment
Any payment which is more than twice the amount of any other regularly scheduled equal payment.
Bill Payment (online)
An online service that allows members to pay recurring bills (utilities, mortgage, etc.) without the use of checks.
Buydown
A mortgage-financing technique with which the buyer attempts to obtain a lower interest rate. The builder or seller or the property usually provides payments to the mortgage-lending institution, which, in turn, lowers the buyer's monthly interest rate and therefore monthly payment.

-C-

Check Card (See Debit Card)
Checking Account (Share Draft Account)
An account with an agreement that allows a member to write a check for payment from their deposits in a financial institution. Some credit unions call a checking account a share draft account.
Closed-End Credit
A credit plan in which the creditor sets a term for repayment of a loan.
Closing Cost
The miscellaneous expenses buyers and sellers normally incur at settlement in the transfer of ownership of real property over and above the cost of the property such as recording fees, attorney fees, title insurance premium, etc.
Club Account
A savings plan whereby a depositor makes periodic (usually weekly) payments.
Collateral
Something of value pledged to assure loan repayment and subject to seizure upon default.
Co-signer
A person, other than the borrower, who signs a note in order to give additional protection to the creditor granting the loan, because of the uncertain credit quality of the borrower.
Conforming Loan
A mortgage that is eligible to be purchased by Federal Home Loan Mortgage Corporation or Federal National Mortgage Association.
Credit Card
A credit card issued by a financial institution, enabling the borrower to buy goods and services or obtain a cash loan from banks honoring that card (i.e., VisaŠ).
Credit History
A continuing record of a borrower's debt commitments and debt payments.
Credit Limit
The maximum dollar amount that may be borrowed.
Creditor
A person or a business who, in the ordinary course of business, regularly extends or arranges for the extension of consumer credit or lends money.

-D-

Debit Card (Check Card)
A plastic card that is used in: (1) automated teller equipment that dispenses cash; or (2) point-of-sale systems that involve immediate debiting of members' accounts and crediting (usually next day) of merchants' accounts.
Debtor
One who owes something to another person, an organization or an institution.
Default
The failure to fulfill a duty or promise or to discharge an obligation or the failure or omission to perform an act.
Direct Deposit
An arrangement in which a member authorizes the issuers of payroll, Social Security, dividend(s) or other checks to send the checks directly to a financial institution for deposit in the individual's account.
Discharge of Lien
Recorded release of a lien when debt has been repaid.
Discretionary Income
What remains of disposable income, after essential living costs are paid.
Disposable Income
Take-home pay or net pay.
Dividend
A share of earnings distributed to shareholders of a credit union.
Dormant Account
A savings account in which there has been no member activity for a specified period of time.
Down Payment
A cash sum required at the outset of a credit transaction, which together with the outstanding loan balance comprises the total cost.
Draw Period
The draw period is the period of time that you can access funds.

-E-

Earnest Money
An amount of money given to bind a contract used in conjunction with a real estate loan.
Equity
The interest or value which an owner has in real property over and above any liens against it.
Escrow
Funds to be paid by a second party to a third party for expenses on property held by the first party; for example, funds held by a financial institution-often collected together with monthly mortgage payments-to meet tax bills and insurance premiums.

-F-

Finance Charge
The total amount of interest that will be paid on a loan when the loan is repaid according to schedule.
First Mortgage
The mortgage that has first claim (or "lien") on real property.
Fixtures
Any attachment to a building which is considered legally a part of it.
Foreclosure
A legal process whereby property pledged as security for a debt is sold to satisfy a debt in the event of a default in payments or terms.

-G-

Guaranteed Asset Protection (GAP)
Guaranteed Asset Protection is a product that covers the difference between the insurance settlement and a loan balance (for those items directly related to the purchase of the vehicle) on a vehicle that is stolen, accidentally damaged beyond repair, or otherwise declared an insurance loss.
Grace Period
A period of time after a due date when payment is not subject to late charges.
Gross Income
Total earnings prior to deductions for taxes, health insurance, employee benefit plans, etc.
Guarantor
A person who promises to answer for the debt or default of another.

-H-

Home Equity Line
A revolving line of credit secured by a home and normally based on the equity in the home.
Home Equity Loan
A fixed-term loan secured by a home and normally based on the equity in the home.

-I-

Individual Retirement Account (IRA)
A tax-sheltered savings plan open to individuals not covered by a qualified private pension or profit-sharing plan, or by a public employee retirement plan.
Index
A published interest rate that lenders use to base interest rate changes on an adjustable-rate loan or line of credit.
Interest Rate
The rate being charged by or being paid by a financial institution for use of credit or monies.

-J-

Joint Account
An arrangement for two or more people enabling all to use an account and assume liability to repay.
Joint Tenancy
A legal term meaning that two or more people own an asset together and yet have equal individual rights to it.
Jumbo
A loan which is larger than the limits set by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation.

-L-

Late Charge or Late Fee
A percentage of the payment or disclosed fixed amount due which is charged for being late or paying after a predetermined grace period.
Late Payment
A payment on which an additional charge may be imposed, since it was made after the due date.
Liability
A debt or legal responsibility to repay debt in full.
Lien
A form of encumbrance which usually makes specific property security for the payment of a debt or discharge of an obligation such as judgments, taxes, mortgages, deeds of trust, or loan.
Line of Credit
The dollar amount a lender is making available to a borrower, which may or may not be draw upon.

-M-

Member
A person holding at least one credit union share who has the opportunity to receive the credit union financial and related services, and has a right to one vote at the annual meeting.
Minimum Balance Account
An account which requires the holder to maintain a specified balance in the account for at least an entire dividend period.
Minimum Payment
The minimum monthly dollar amount that you must pay on your account. Under some repayment plans, the minimum payment may cover interest only: under others, it may include both principal and interest.
Mortgage
A legal instrument by which a borrower gives a creditor a lien on property as security for a loan; the lien created by the instrument.

-N-

Non-Sufficient Funds (NSF)
A check that has been presented for payment, but the amount written exceeds the available balance in the account. Check is then returned for non-sufficient funds.

-O-

Overdraft Protection
A line of credit permitting a person to write drafts/checks for more than the account balance, with interest charged on the amount borrowed. This type of protection is usually linked to a checking account.

-P-

Points
The amount charged by the mortgagee for granting a loan, often referred to as points, acquisition credits, or initial service charge. Loan fees are generally stated as a percent of the face amount of the loan. The charge is generally made to cover the cost of placing the loan on the books, but also may represent, in part, an adjustment of yield.
Point-of-Sale (POS)
The capturing of data and customer payment information at a physical location when goods or services are bought and sold.
Principal
The actual amount of a loan before finance charges and other charges are added or deducted.

-R-

Recording Fee
Cost of recording necessary documents with the appropriate state or county administrative office.
Repayment Period
In a line of credit, the period when no advances of principal are available and during which the line must be fully repaid, according to the payment terms. In a home equity line of credit, the repayment period is the portion of the loan term that follows the draw period.
Repossession
Act of reclaiming security for a loan other than real property.
Revolving Account
Line of credit that may be used repeatedly up to a certain specified time.
Routing and Transit Number (See ABA Routing Number)

-S-

Second Mortgage
A mortgage on real estate which already has a first mortgage.
Secured Credit
Credit which is backed by assets belonging to the borrower in order to decrease the risk assumed by the lender.
Security Interest
An interest that a lender takes in the borrower's property to ensure repayment of debt.
Share
A given amount of money a person deposits with a credit union to become a member which confers ownership rights, has a stated par value and pays dividends.
Share Account (Savings Account)
Accounts that lets members set aside a portion of their liquid assets that could be used to make purchases while earning a monetary return.
Share Certificate Account (Certificate of Deposit)
An account that will earn dividends at a particular rate if held to maturity, and on which a penalty shall be assessed for the withdrawal of all or any portion of the principal amount prior to maturity.
Share Draft Account (See Checking Account)
Share Insurance
Insurance that protects a credit union member's savings against the loss up to $100,000 on each account.
Signature Card
A card bearing a member's signature that contains the contract between the member and the credit union. The card is kept on file by the credit union for signature verification.

-T-

Taxpayer Identification Number (TIN)
A number, usually a Social Security Number, required by the Internal Revenue Service for taxpayer identification.
Term
Length of time designated for total repayment of loan.
Title
Legal ownership.
Title Search
A check of public records to determine current ownership of a parcel of real estate.

-U-

Unsecured Credit
Credit granted on the basis of a borrower's creditworthiness and signature; not secured by collateral.

-V-

Variable Rate
An interest rate on a loan or line of credit that changes over time. Usually based on the Wall Street Journal Prime Rate or a similar index.

-W-

Wire Transfer
An electronic transfer of funds across a network administered by hundreds of banks around the world.