Financial Glossary

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2–1 Buydown
A mortgage option that offers a reduced interest rate for the first two years of the loan term. In the first year, the interest rate is typically two percentage points lower than the permanent rate, and in the second year, it is usually one percentage point lower than the permanent rate. The permanent rate takes effect in the third year.

529 Plan
A 529 plan is a tax-advantaged savings plan designed to help families save money for future educational costs. The two types of 529 plans are: 529 prepaid tuition plans and 529 education savings plans.

529 Prepaid Tuition Plan
A 529 prepaid tuition plan allows families to pay tuition ahead of time for specific colleges or college systems at today’s tuition rates. As a type of 529 plan, it is tax-advantaged.

529 Education Savings Plan
A 529 education savings plan allows families to invest their education savings in various types of investments, including mutual funds. Like a 401(k) or IRA retirement plan, the account value could go up or down depending on market performance. This plan, also called an education savings plan, is typically sponsored by a state and/or may be available from a private investment firm. Families can also use this plan to help pay tuition at public, private, or religious schools from kindergarten through 12th grade. As a type of 529 plan, it is tax-advantaged.

A

AARP
The leading organization for people aged 50 and older in the U.S. The American Association of Retired Persons, commonly known by its initialism AARP, offers seniors discounts, healthcare options, insurance products, travel-related services, education, and learning resources.

Account Alerts
Automated notifications that your financial institution sends you in real time by phone, email, text message, or push notification regarding questionable account activity, helping you to quickly catch problems that may arise with your account.

Account History
The payment history of your account over a specific interval, including the number of times the account was past due or over limit.

Account Holder
Any and all individuals designated and authorized to transact business on behalf of an account. Each account holder’s signature must be on file with the financial institution.

Adjustable-Rate Mortgage (ARM)
A mortgage that starts with a typically lower fixed interest rate for a set number of years (such as five, seven, or 10), before adjusting periodically for the remainder of the term based on current market rates. This option offers potentially lower upfront costs, but your interest rate may rise in the future.

Advance Healthcare Directive
The two main kinds of advance care directives are living wills and powers of attorney. In your living will, you can specify in advance how much medical intervention and what type of end-of-life care you would prefer. A medical power of attorney allows you to designate someone to make medical decisions for you. These terms are often used interchangeably but are not the same kinds of document and you should have both in place.

Advertisement
Billboards, radio/streaming service spots, online videos, signs, television/YouTube commercials, and other mass media that businesses purchase and use to define their brand, call attention to and promote their products or services, and attract sales.

Agent
An agent is a person you appoint to act on your behalf in legal, financial, and medical matters when you can’t, under a power of attorney, while you are alive but incapacitated, to handle assets that are both in and outside of your trust.

Agreement of Sale
A legal document that outlines the terms of a real estate transaction, including the price and other details, and is signed by the seller and the buyer. An agreement of sale is also known as a contract of purchase, contract for sale, contract agreement, or sale agreement.

Amortization
Mortgage amortization is the process of paying off a home loan over time through regular payments. This term is used to describe both the repayment schedule of the loan and the breakdown of each payment into portions that go toward the principal and interest.

Annual Percentage Rate (APR)
The annual rate of interest charged to borrowers, including loan-related fees. Typically associated with mortgages, loans, and credit cards.

Annual Percentage Yield (APY)
The rate earned on an investment in a year, including the compounding of interest. Almost all savings accounts, and many checking accounts, earn an APY.

Appraised Value
The value of a property determined by a licensed appraiser, who considers the location, size and condition of the home and any renovations that have been completed. Mortgage lenders look at the appraised value when a borrower applies for or refinances a mortgage.

As-Is
A stipulation that the property is being purchased in its current condition, without the seller completing any repairs or work on the property before the sale.

Assessed Value
The dollar value assigned to a home or other real estate for property tax purposes, accounting for the value of comparable properties in the area, among other factors. Assessed value may be calculated as a percentage of the fair market value of the property.

Associate Degree
An associate degree is usually awarded for at least two years (or the equivalent) of full-time academic study beyond high school.

ATM
Automated Teller Machine. An ATM can process a variety of transactions, including deposits and withdrawals. Using an ATM outside of your financial institution’s network usually comes with a surcharge from the ATM’s owner, as well as a “non-network” fee from your financial institution.

ATM Card
A plastic card issued by a financial institution that gives you access to an ATM. It may or may not allow you to purchase items as a debit card would.

Authorization
The issuance of approval by a credit card issuer, merchant, or other affiliate, to complete a credit card transaction.

Authorized User
An authorized user is someone you add to your credit card account. They will receive a credit card with their own name on it, and they can use it for purchases just like you use yours.

Automated Clearing House (ACH)
A computer-based network that coordinates electronic payments and automated money transfers for a variety of payment services, including payroll, direct deposit, many check payments, and online bill payments.

Automatic Bill Payment
A checkless system for paying recurring bills (e.g., mortgage, credit card, utility) through a financial institution on a predetermined date with one authorization statement. The necessary debits and credits are made through an Automated Clearing House (ACH).

Available Credit
The difference between the credit limit assigned to your cardholder account and the present balance of the account.

B

Bachelor’s Degree
A bachelor’s degree is usually awarded for at least four years (or the equivalent) of full-time academic study beyond high school.

Balance Transfer
The process of moving an outstanding credit card balance to a different card. This is usually done to obtain a lower interest rate on the outstanding balance. There may be a balance-transfer fee.

Bank Statement
A summary of all deposits made, all checks paid, and other debits posted in a financial institution account during a set period (usually one month), as well as the beginning and ending balance.

Banking Day
A day during which offices of a financial institution are open to the public for substantially all the financial institution’s business functions.

Benefit
Something that an employer, the government, or an insurance company provides that’s often used only for a particular purpose, such as food or medical costs. Also: an advantage; something that is good.

Beneficiary
A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract or account.

Billing Cycle
The interval, typically one month, between the end of one billing statement date and the next billing statement date.

Billing Date
The month, day, and year that a periodic or monthly statement, which includes calculations of appropriate finance charges, minimum payment due, and new balance, is generated for customers who have incurred an obligation, such as credit cards, rent, loans, or phone bills.

Research shows that following a budget can help reduce stress.

Billing Error
A charge that appears on a periodic statement associated with an extension of credit (e.g., credit card) that was not authorized by the cardholder or the cardholder’s designee, is not properly identified, and was not accepted by the cardholder or the cardholder’s designee. A billing error may also be the result of a creditor’s failure to credit a payment or other credit to an account, as well as accounting and clerical errors.

Broker-Dealer and Registered Representative (RR)
Individuals who are licensed and registered by the Financial Industry Regulatory Authority, or FINRA, which regulates the trading of securities like stocks and bonds. Broker-dealers or RRs may also sell mutual funds, life insurance, and other commission products.

Budget
A plan that outlines what money that an individual, household, enterprise, or municipal entity expect to earn or receive (income) and how the money will be saved, invested, or spent (expenses) for a specific period of time; also called a spending plan. It is usually reevaluated periodically.

Business Day
A day on which offices of a financial institution are open to the public for substantially all the financial institution’s business functions.

Buy
To get something by paying money for it.

Buying Plan
A plan people use to identify and consider factors like cost, features, and choices as they prepare to make a purchase. May also refer to an obligation to purchase a series of items on a set schedule in exchange for a proposed discount.

Buying power
The amount of money that an individual or entity has to spend on goods and services.

C

Canceled Check
A check that a financial institution has paid, charged to the account holder’s account, and then endorsed. Once canceled, a check is no longer negotiable. A check may also be canceled by its writer before it has been transacted by alerting the issuing financial institution.

Career
A type of savings account offered by a bank; sometimes called a share certificate when offered by a credit union. By committing to hold your savings in this account for a predetermined period of time, you can earn a higher fixed interest rate. Funds can be withdrawn penalty-free once the CD or certificate matures.

Cashier’s Check
A check issued by a financial institution, usually for a fee, funded by the financial institution’s money, and signed by a cashier or teller for a third party who also pays the face value of the check to the financial institution. Some sellers may request a cashier’s check in place of a personal check to ensure that the check won’t be returned for insufficient funds. Also known as an official financial institution check.

Cash
Paper or coin money used to exchange for goods and services.

Career
A profession that may span your lifetime and includes your education, training, professional memberships, volunteering, and full history of paid work. Can be a synonym for occupation.

Certificate of Deposit (CD)
A type of savings account offered by a bank; sometimes called a share certificate when offered by a credit union. By committing to hold your savings in this account for a predetermined period of time, you can earn a higher fixed interest rate. Funds can be withdrawn penalty-free once the CD or certificate matures.

Certificate of Deposit Ladder
A way of organizing a money into separate certificates of deposit, or CDs, of varying lengths so that they mature at different times. The method allows the consumer greater accessibility to their money than putting it all into one CD for a long period.

Certified Check
A personal check drawn by an individual, which is certified, or guaranteed, to be good. The face of the check bears the words “certified” or “accepted,” and the check is signed by an official of the financial institution issuing the check. The signature warrants that the signature of the drawer is genuine, and sufficient funds are available for payment of the check.

Certified Financial Planner (CFP^®)
An individual who can give financial advice and help you manage your finances. A CFP meets strict requirements for education and experience and has passed a certifying exam. CFPs are fiduciary advisors and must act in the best interest of their clients.

Charge-Off
The balance on a credit obligation that a lender no longer expects to be paid and writes off as a bad debt.

Check
A written order instructing a financial institution to pay immediately on demand a specified amount of money from the check writer’s account to the individual or individuals named on the check or, if a specific person is not named, to whoever bears the check to the institution for payment.

Check Hold
A check hold is the length of time a financial institution can hold funds deposited by check before it credits a customer’s account.

Checking Account
A demand deposit account at a financial institution that is subject to withdrawal of funds by check by the account holder. Many people use checking accounts to receive their wages and pay their bills.

Closed-Loop Prepaid Card
A card that can only be redeemed at certain locations. For example, a closed-loop card might be good for use only at a specific store or group of stores or on your public transportation system. Gift cards are an example of closed-loop cards.

Closing
The final step in the homebuying process in which ownership of the property is officially transferred to the buyer. Closing procedures include signing paperwork and settling finances.

Closing Costs
Fees associated with finalizing a real estate transaction. These costs typically include things like application and inspection fees, homeowners insurance, property taxes, and real estate agents’ commissions.

Coin
A small metal disk that can be exchanged for goods and services. In the U.S., coins represent fractions of a dollar.

Coinsurance
The joint assumption of risk between the insurer and the insured. In property insurance, it is the requirement, expressed as a fixed percentage of the value of a property that the policyholder must insure the property for. In health insurance, the term is sometimes used synonymously with copayment, but copayment is really fixed while coinsurance is a percentage that the insurer pays after the insurance policy’s deductible is exceeded up to the policy’s stop loss.

Collateral
An asset that is used to secure a loan or other credit (such as a home for a mortgage, or a car for an auto loan). If the debt is left unpaid, the lender has a claim to this property to recoup its money.

Commission
A percentage of the sale that is paid to the real estate professional. Typically, commissions for both the buyer’s and the seller’s agents are paid at closing by the seller of the property.

Comparative Market Analysis (CMA)
A process used to determine the value of a home based on the sale prices of similar properties in the area.

Comparison Shopping
The practice of comparing prices, features, benefits, risks, and other characteristics of two or more similar products or services before purchasing them.

Construction Loan
A short-term loan that can be used to help cover the costs of building a new home, including materials and labor.

Contingency
A condition that must be met for a real estate contract to be finalized.

Conventional 97 Loan
A mortgage offered by government-sponsored entity Fannie Mae that requires only a 3% down payment and may offer more flexible terms than a conventional mortgage.

Conventional Mortgage
A mortgage loan not insured or guaranteed by the government. It is subject to conditions established by the lender and federal regulations.

Copayment (copay)
A fixed amount (e.g., $20) that an insured patient pays for a covered healthcare service in addition to the amount the insurer pays, usually at the time of service. It is often expressed as a set fee for a specific service.

Cosigner
An individual who chooses to take on the legal obligation of a loan with a primary borrower. They become responsible for paying the debt if the primary borrower is unable to make payments. A cosigner may help those with less-than-perfect credit qualify for a loan.

Cost of Attendance (COA)
Cost of attendance is total amount of money it will cost a student to go to school — usually stated as an annual figure. COA includes tuition and fees; room and board (or a housing and food allowance); allowances for books, supplies, transportation, loan fees, and any applicable dependent care; and some miscellaneous and personal expenses.

Counteroffer
The revised offer a seller submits in response to a formal offer from a prospective buyer. This begins the negotiating process in which terms are adjusted until both parties agree to them, or one party withdraws.

Credit
Borrowing money, or having the right to borrow money, to buy something, often by means of a credit card or a loan.

Credit Account Agreement
The contract governing your open-ended or revolving credit account (for credit cards, home equity lines of credit, and debit cards), which gives you information about changes that may occur to the account. Often titled “Terms & Conditions.

Credit Card
A plastic (less often metal) payment card issued by a financial institution or a business, which allows cardholders to make in-store and online purchases using a line of credit. In addition to facilitating convenient, cash-free purchases, credit cards are considered a valuable way to build credit.

Credit Card Statement
A summary of your credit card transactions, including the charges you’ve incurred and the chargebacks credited to your card for a billing period. The statement also indicates the amount of credit you have left compared to the amount of credit you have used.

Credit Limit
The maximum amount of credit that is available on a credit card or other line of credit.

Your credit score is based on five factors:

1. Your payment history
2. How much of your available credit you’re using
3. The age of your credit accounts
4. Whether you have applied for a lot of credit recently
5. What types of credit you use

Credit Report
A detailed report of an individual’s history as a borrower. It is prepared by a credit bureau and used by a lender in determining a loan applicant’s creditworthiness.

Credit Score
A number between 300 and 850 that measures an individual’s creditworthiness. The most well-known type of credit score is the FICO^® Score. Financial institutions review your credit score to help determine whether you qualify for a loan or credit card.

Creditworthiness
An individual’s assessed ability to repay debts, evaluated by lenders based on factors like credit reports and current financial situation.

Currency
Currency is money, in the form of paper and metal disks (coins), usually issued by a government and generally accepted at its face value as a method of payment for goods and services.

D

Days on Market
The total time a property is actively listed for sale before being purchased or removed from the market. It can be used as a metric for market conditions.

Debit Card
A card issued by a financial institution that allows you, the account owner, to spend and withdraw account funds electronically. Debit cards may be used to obtain cash from ATMs or make purchases as you would with a credit card.

Debit Card Use Alert
This feature notifies you of all debit card purchases made on your account, including merchant name and transaction amount, allowing you to monitor your spending and catch any unauthorized use.

Debt
Money you owe another person or a business.

Debt Consolidation
Various debts, including credit card bills or loan payments, rolled into a single new loan with one monthly payment. Consolidation may be a way to simplify or lower payments on multiple credit card accounts or loans; however, a debt consolidation loan does not erase your debt. You may end up paying more by consolidating debt into another type of loan.

Debt-to-Income (DTI) Ratio
A measurement of how much of a person’s monthly income goes toward paying debts. It helps lenders calculate the risk associated with making a loan to a borrower. DTI ratio is the total of all monthly debt payments divided by monthly gross income.

Deed
A signed legal document that proves ownership of a property. It transfers the rights of the property from the old owner(s) to the new owner(s). Deeds include details about the parties involved and the property itself.

Deflation
An economywide decline in prices for goods and services, which is associated with a rise in purchasing power. The rate at which purchasing power rises can be reflected in the average price decrease of a basket of selected goods and services over a specific period of time. The fall in prices, which is often expressed as a percentage, means that a dollar effectively buys more than it did before. Deflation can be contrasted with inflation, which occurs when prices rise and purchasing power decreases.

Deferred Payment
A payment postponed until a future date.

Demand
A measure of how popular or necessary an item is and how many consumers want to buy it for a specific price. Increases in the price of a good or service will usually decrease the quantity demanded; conversely, a decrease in the price of a good or service will escalate demand.

Direct Deposit
A payment (often one’s paycheck) that is electronically deposited into an account.

Direct Deposit Alert
This feature notifies you when a direct deposit, such as your paycheck or tax refund, arrives in your account, allowing you to plan your bill payments and budget for large purchases.

Doctoral Degree
A doctoral degree, or doctorate, is usually awarded for at least three years (or the equivalent) of full-time academic work beyond a bachelor’s degree.

Dollars
Basic monetary units in the form of printed paper or metal coins, produced by the government. Five U.S. territories and 11 nations use U.S. dollars as their official currency. Many other countries use the term “dollars,” most notably Canada and Australia; however, they do not have equivalent values.

Down Payment
An upfront, partial payment that is required by a lender when applying for a large secured loan, such as a mortgage or auto loan.

E

Earned Income
Income, including commissions, net earnings from self-employment, salaries, tips, and wages, received for service or work performed. Also referred to as active income.

Earnest Money
Sometimes called a good faith deposit, this is a cash deposit paid by the buyer during a real estate contract to show that they are serious about buying the property.

Entrepreneur
Someone who organizes, manages, and assumes the risks of a business or enterprise.

Equity
A measure of ownership in a property calculated by taking the market value of a property and deducting the amount that is still owed on the mortgage.

Escrow
A process in a real estate transaction in which a neutral third party holds onto funds and important documents on behalf of the buyer and seller until certain conditions, as set out in the purchase agreement, are met.

Executor
The individual you name in your will to settle your estate according to your directions outlined in your will. They collect your assets, pay debts, and distribute remaining funds, among other duties, and represent your interests, when your estate goes through probate in court.

F

Fair Market Value
The price an asset, like real estate, would sell for on the open market, given that both buyer and seller are knowledgeable about the property, are working in their own best interests free of excessive external pressure, and have enough time to complete the purchase or sale. Fair market value should represent an accurate valuation of the property’s worth.

Fannie Mae HomeReady™/ Freddie Mac Home Possible^® Loans
Two programs offered by government-sponsored entities for homebuyers with low to moderate income that feature more accessible requirements for co-borrower, down payment, and credit. Both programs require buyers to complete some form of homeownership education.

Federal Deposit Insurance Corporation (FDIC)
A government-run organization that examines and supervises banks and insures their deposits for up to $250,000 per depositor if the bank fails. FDIC insurance is backed by the full faith and credit of the U.S. government.

Federal Income Tax
Taxes levied by the U.S. Internal Revenue Service (IRS) on the annual earnings of individuals, corporations, trusts, and other legal entities. Federal income taxes apply to all forms of earnings that make up a taxpayer’s taxable income, including bonuses, certain types of unearned income, commissions, investment income, salaries, tips, and wages.

Federal Student Loans
Federal student loans are funded by the U.S. government with terms and conditions set by law. Federal loans also include benefits that private student loans don’t usually offer, which may include lower interest rates, repayment plans based on income, and possible loan forgiveness for people who choose to work for a certain amount of time in government, for certain not-for-profit organizations, or as teachers in a low-income school.

Federal Work-Study
Federal Work-Study programs provide funding for part-time jobs to help students earn money to pay for college expenses.

Fee
A charge for a financial service or specific transaction. For deposit accounts, credit cards, loans, and other financial products, your financial institution will disclose any fees associated with the product.

FHA Loan
A mortgage insured by the Federal Housing Administration (FHA) that’s designed to make homeownership more accessible, particularly for first-time homebuyers, with less stringent credit and down payment requirements than conventional mortgages.

Fiduciary
A person with a legal and ethical duty to act on someone else’s behalf in financial and other matters. Executors, trustees, agents, and guardians are all examples of fiduciaries.

Financial aid
Money given to students as grants, work-study opportunities, loans, and/or scholarships to help families pay for postsecondary tuition and fees, as well as related costs such as room and board, books, supplies, and transportation.

Financial Coach
Individuals who work with you on your financial literacy, helping you learn the basics so you can build future wealth. Financial coaches focus on money management skills, such as how to pay down debt or create a budget, and don’t usually give investment advice.

Financial Consultant
This is a general term, like financial planner, that does not stipulate any specific skills or training; however, a Chartered Financial Consultant^® (ChFC^®) is tested and certified by The American College of Financial Services. Similar to a CFP, a ChFC is a fiduciary and must follow a strict code of ethics.

Fixed-Rate Mortgage
A mortgage with an interest rate that does not fluctuate. The interest rate may be higher than the initial rate offered by an ARM, but it does not adjust according to market or economic conditions. This option offers more stable payments for the life of the loan and protects homebuyers against rate increases, but the interest rate will not decrease even if market rates do.

Foreclosure
A property seized by the mortgage lender due to a homeowner’s failure to make full payments on their mortgage loan. The lender may sell the house to recover the balance of the loan.

Foreign Transaction Alert
This feature notifies you of any transaction made in a foreign currency, whether it’s online or in person. When traveling, these alerts can also help you monitor additional fees.

Forged Check
A check on which the drawer’s signature has been imitated with intent to defraud.

Forgery
The fraudulent imitation of a signature or alteration of another’s name on an instrument, such as a deed, mortgage, or check, with intent to deceive or defraud.

Free Application for Federal Student Aid (FAFSA)
The Free Application for Federal Student Aid form is used to determine how much federal financial aid a student and his or her family are eligible to receive. FAFSA may also be used to determine whether a student is eligible for state- and school-based aid and may affect how much private aid a student receives.

G

Gig
A single project or task for which a worker is hired to work on demand. Some gigs are a type of short-term job, and some workers pursue gigs as a self-employment option.

Gig Economy
Generally, an informal term for situations in which people are hired for single projects or tasks or for short-term jobs, often through a digital marketplace.

Goal
Something, such as an outcome, that an individual or entity wishes to achieve or accomplish in a specific amount of time.

Goods
Tangible objects people want, such as toys, clothes, and food.

Government Benefits Card
Prepaid cards used by a government agency to pay certain government benefits, such as unemployment insurance.

Grace Period
The number of days you have to pay your bill in full before you start to accrue finance charges. If your card does not permit you this period, you may have to pay interest from the date you use your card or when the purchase is posted to your account.

Grant
A grant is a type of financial aid that does not have to be repaid, unless, for example, the student withdraws from school and must pay back all or some of the grant money. Grants are often need-based.

Gross Income
Your total earnings before taxes, pension contributions, health insurance contributions, and other items are deducted. Gross income for consists of income from wages and salaries plus pensions, interest, dividends, and rental income.

Guardian
An individual who is legally responsible for managing the well-being and/or finances of a conservatee or ward; also known as a conservator. A guardian must act in the best interests of the conservatee, usually a minor child or someone who is unable to care for themselves.

H

High Balance Alert
This feature notifies you when it’s time to move money from your checking account into your savings, retirement, or other investment account to facilitate savings or optimize interest earned.

Home
A home is a physical structure in which one or more individuals lives. In a legal sense, a home is the place of permanent residency where a person or group of people lives or intends to return to live.

Home Appraisal
A valuation of real estate by the estimate of an authorized appraiser, who is designated by a regulatory body governing the jurisdiction of the appraiser. Appraisals are typically used for insurance and taxation purposes or to determine a possible selling price for a property. An appraisal may be required by a lender to determine the value of a property for which a buyer is seeking a mortgage.

Home Equity
The value of a home minus the amount the homeowner still owes on their mortgage. Home equity increases as a homeowner pays off their mortgage and as the property value rises.

Home Equity Line of Credit (HELOC)
A revolving line of credit secured by the equity in an individual’s home. Because the home serves as collateral, a HELOC can provide a significant amount of low-interest financing for home improvements, debt consolidation, and other major expenses. Like a credit card, the available credit in the HELOC is replenished as you pay your outstanding balance.

Home Equity Loan
An installment loan secured by the equity in a person’s home. Like a HELOC, a home equity loan is a second mortgage that can be used for home improvements and other big expenses. Home equity loans are paid out in one lump sum.

Home Inspection
An evaluation performed by an inspector, who observes and reports on the condition of a real estate property and its systems (e.g., HVAC), usually when the property is on the market to be sold.

Home Warranty
A residential service contract that covers the cost of maintaining household systems or appliances for a set period. A home warranty is different from homeowners’ insurance and from a structural warranty, which homebuilders and buyers use and is for newly built homes.

Homeowners Association (HOA)
An organization in a subdivision, planned community, or condominium building that makes and enforces rules for the properties and residents. Purchasers of property within an HOA’s jurisdiction automatically become members and are required to pay dues, which are known as HOA fees. HOAs are run by a board of directors, may collect monthly or annual fees to pay for the maintenance and the upkeep of common areas, and may impose fines on homeowners who do not comply with their rules.

Homeowners Association (HOA) Fee
Money that must be paid by owners of certain types of residential property every month or each year to their homeowners associations (HOAs) for amenities and to maintain and improve common areas of the condominiums, apartment buildings, or planned communities.

Homeowners Insurance
An insurance policy that covers the cost of damage or loss to the home, property, or possessions. Lenders require proof of homeowners insurance before closing on your home.

HUD Good Neighbor Next Door Program
A program that aims to encourage honorable community members to buy real estate in struggling areas to rejuvenate the local community and economy. Eligible homes are listed exclusively through the program with a 50% discount on the list price.

I

Individual Retirement Account (IRA)
A retirement savings account available through many financial institutions, which lets you make yearly tax-deductible contributions up to a specified limit. The amount contributed is not taxed until withdrawn around retirement age.

Saving for retirement is essential. That’s because the Social Security program isn’t designed to cover all your living expenses in retirement. In 2020, the average monthly Social Security payment was only $1,503 ($18,036 per year).

Source: Social Security Administration

Impulse purchase
Buying things without having planned for them beforehand. It can cause consumers to spend more money than they can afford.

Income
Money earned or received in exchange for labor, services, or products in the form of commissions, contracted pay, government transfer payments, gifts, inheritance, interest, investment dividends, tax refunds, and tips.

Income Tax
Tax levied by federal, state, and local governments on personal, business, or corporate income, both earned (commissions, salaries, tips, wages) and unearned (dividends, interest). Not all states and localities have income taxes.

Indemnity Insurance
An insurance policy that compensates an insured party for certain unexpected damages or losses up to a certain limit – usually the amount of the loss itself. Insurance companies provide coverage in exchange for premiums paid by the insured parties. These policies are usually intended to protect professionals and business owners when they are found to be at fault for a specific event, such as misjudgment or malpractice and generally take the form of a letter of indemnity.

Inflation
An economywide increase in prices for goods and services, which is associated with the decline of purchasing power. The rate at which purchasing power drops can be reflected in the average price increase of a basket of selected goods and services over a specific period of time. The rise in prices, which is often expressed as a percentage, means that a dollar effectively buys less than it did before. Inflation can be contrasted with deflation, which occurs when prices decline and purchasing power increases.

Inheritance
The assets passed down after someone dies. Inheritance can include cash, stocks, bonds, cars, jewelry, art, antiques, real estate, and other tangible and intangible assets, which can be left to anyone of your choice, regardless of relationship.

Inspection
A thorough evaluation of the condition of a property, including major systems, structures, appliances, fixtures, and other property features. Inspections are typically performed by professional home inspectors and include internal and external components.

Insurance
The practice or arrangement in which a company or government agency provides a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a premium. The company or agency pools clients risk to make premiums more affordable for the insured. Insurance policies are used as a hedge against the risk of financial loss that may result from damage to the insured or their property or from liability for damage or injury caused to a third party.

Insurance Claim
A policyholder’s formal request for payment for coverage or compensation for loss incurred and covered under the policy agreement. The insurance company validates (or denies) the claim. If it is validated, the insurance company will pay the insured or an approved interested party on behalf of the insured.

Insurance Coverage
The amount of risk or liability that is covered for an individual or entity by way of insurance services, such as auto insurance and life insurance – or more exotic forms, such as hole-in-one insurance – issued by an insurer in the event of unforeseen events.

Insurance Deductible
The amount of expenses an insured must pay before the insurance company will contribute toward the covered item. For example, the amount the insured pays for covered healthcare services before the insurance plan starts to pay is referred to as the deductible.

Insurance Policy
A written contract between the insured and the insurer.

Insurance Premium
The amount of money that must be paid for an insurance policy, which may include healthcare, auto, home, and life insurance. Once earned, the premium is simultaneously income and a liability for the insurance company, because the insurer must provide coverage for claims made against the policy. Failure to pay the premium on the individual or the business may result in the cancellation of the policy.

Insurance Underwriter
Professionals who evaluate, analyze, and assume the risks involved in insuring people and assets, using specialized software and actuarial data. Insurance underwriters establish pricing for accepted insurable risks. The term “underwriting” means receiving remuneration for the willingness to pay a potential risk.

Insured
The person whose life, property, or practice is covered by an insurance policy.

Insurer
A person or company offering insurance policies in return for premiums; a person or organization that insures.

Interest
The cost of borrowing money from a lender, typically expressed as a percentage of the loan amount, or principal.

Interest Rate
The amount of money, usually a percentage, paid in exchange for the use of money for a specific period of time. If you borrow money, you pay a lender a percentage of the principal in interest. If you have a savings account, your financial institution pays you a percentage of your account balance in interest.

Intestate
The situation in which someone dies without a valid will or trust, resulting in their estate being distributed by the courts according to intestacy law, which typically recognizes spouses and children in line to inherit.

Investment Income
Money received from capital gains, dividends, interest, royalties, and other income from investments. Also known as investment income.

Irregular Income
Inconsistent amounts of money received through work or investments; both the timing and the amount may vary.

J

Job
A specific arrangement in which an individual performs tasks for an employer in exchange for wages or a salary.

Joint Account
A financial institution account that has two owners who can access and view transactions. The accounts are commonly used by couples, parents and their teenage children, and adults assisting aging parents. Joint account holders have equal access to funds but also share equal responsibility for any fees or charges incurred.

Jumbo Loan
A mortgage for a high-cost home. Jumbo loans are also known as “nonconforming” mortgages because they exceed the loan limit set by the Federal Housing Finance Agency for loans that can be purchased from lenders by the government-sponsored entities Fannie Mae and Freddie Mac and resold to investors.

L

Large ATM Withdrawal Alert
This feature notifies you when a large ATM withdrawal occurs on your account, allowing you to identify potentially fraudulent transactions or unauthorized withdrawals.

Large Purchase Alert
This feature notifies you of transactions that, based on your customized settings, exceed a specified amount that is usually higher than that used for single transaction alerts, helping you to catch unauthorized transactions or prevent overspending.

Last Wishes/Guidance Letter
This informal letter, which is not legally binding, is meant to accompany the legal documents in your estate plan. In a guidance letter, you may explain your end-of-life choices to your grieving family, specify instructions for your funeral arrangements, give directions to find your important documents, and express some final thoughts that might comfort your loved ones.

Liability Insurance
An insurance product that provides a policyholder with protection against claims resulting from injuries and damage to other people or property. Liability insurance policies cover legal costs and payouts for which an insured party is responsible if they are found legally liable. Intentional damage and contractual liabilities are generally not covered in liability insurance policies. Unlike other types of insurance, liability insurance policies pay third parties and not policyholders.

Life Insurance
A contract between an insurance company and a policyholder that provides a lump sum payment to the policyholder’s family (or other named beneficiary) when the policyholder dies, in exchange for the premiums paid during the policyholder’s lifetime. Named beneficiaries receive the money to use as they see fit.

Linked Savings Account
A savings account that is connected to another account, usually with the same owner, to facilitate transfers between the two.

Loan-to-Value Ratio (LTV)
This ratio shows how much of a property a homeowner owns outright compared to how much they owe on their loan. As a homeowner’s equity goes up, their LTV goes down. On a $100,000 home with an outstanding mortgage balance of $80,000, the loan-to-value ratio is 80%.

Long-Term Goals
Goals that can take more than ten years to achieve.

Low Balance Alert
This feature notifies you when your account balance falls below a threshold you specify, allowing you to move money from your savings account into your checking account to avoid overdraft fees or tighten spending until the next payday.

M

Manufacturer’s Warranty
A promise from a company to replace an item or pay for some repairs or services over a limited period of time, usually a few years, if their product does not perform as described or intended.

Marital Deduction
This unlimited federal tax deduction protects spouses from paying estate tax on inheritance. The marital deduction makes asset transfers, when done correctly, between spouses, tax exempt.

Master’s Degree
A master’s degree is usually awarded for one or two years of full-time academic study (or the equivalent) beyond a bachelor’s degree.

Maturity Date
The date on which the principal balance of a bond, CD, loan, or other financial instrument becomes due and payable.

Medium-Term Goals
Goals that can take three to 10 years to achieve

Minimum Balance
The amount of money required by a checking or savings account to qualify for benefits like the ability to earn interest or waive a monthly service charge. Some accounts do not have a minimum balance requirement.

Minimum Payment
The minimum dollar amount that must be paid each month on a loan, line of credit, or other debt to avoid a penalty or risk of defaulting on the loan.

Minimum Wage
The lowest wage per hour that a worker may be paid as established by federal or state law.

Missing Payment
A payment that has been made but not credited to the appropriate account.

Mobile Banking
App-based online banking that lets you manage your accounts and complete many banking transactions remotely via smartphone, tablet, or smartwatch.

Mobile Check Deposit
A mobile banking tool that lets you deposit checks through your financial institution’s app by “scanning” the check using the camera on your smartphone.

Mobile Wallet
A virtual wallet app that securely stores a user’s debit or credit card information and lets them make fast, card-free purchases directly from their smartphone.

Money
Currency that can be exchanged for goods and services. Money varies in form and value in different countries around the world.

Money Order
A prepaid, secure way to send money to others, issued by a financial institution or post office. It is a physical slip of paper and must be signed by both the sender and receiver to be valid.

Money Market Deposit Account
A savings account that typically offers a higher rate of interest for higher balances.

Mortgage
A real estate loan in which the property serves as collateral for the loan.

Multiple Listing Service (MLS)
A digital database of current real estate listings that is operated by a group of agents or brokers. An MLS provides accurate, up-to-date information about the status of local listings.

N

Needs
Basic things that people must have to survive (such as food, clothing, and shelter), resources they need to do their jobs (such as reliable transportation and the tools of their trade), and resources to help build and protect their assets so they can meet future needs (such as emergency savings and insurance).

National Credit Union Administration (NCUA)
A government organization that regulates and supervises credit unions and insures their deposits for up to $250,000 per depositor if the credit union fails.

Net Income
The amount of money you bring home in a paycheck after taxes and other deductions are taken out; also called take-home pay.

O

Occupation
A type of work with associated tasks, education, training, typical wages, work settings, and more. Can be a synonym for career.

Offer
A formal document that outlines a prospective homebuyer’s offer and terms for the purchase of a property. It typically includes the sale price and terms like contingencies.

Online Banking
An online platform that allows a financial institution’s customers or members to manage their accounts and conduct transactions remotely, wherever an internet connection is available.

The first online banking website was launched in 1994.

Open-Loop Prepaid Card
A card that with a network logo that can be used at any location that accepts that card type. Examples of networks are Visa, Mastercard, American Express, and Discover.

Opportunity Cost
Cost of the next best use of money or time when a consumer chooses to purchase or do one thing rather than another; it may represent the potential benefits that an consumer misses out on when choosing one alternative over another.

Option Period
A specified number of days during which a homebuyer has the right to have the property inspected and can withdraw from the purchase agreement for any reason.

Out-of-Pocket Cost
Expenses and losses that are not reimbursed by insurance, including deductibles, copayments, and amounts paid for services or repairs that are excluded from coverage; the amount paid before insurance coverage is applied.

Outstanding Check
A check written by a depositor that has not yet been presented for payment to or paid by the depositor’s financial institution.

Overdraft
When a withdrawal or purchase causes a checking account’s balance to dip below zero. If a transaction leads to a negative balance, the account holder will be charged an overdraft penalty.

P

Passive Income
Money received from enterprises in which you are not actively involved, including rental property, limited partnerships, or other businesses in which a person is not actively involved. Also known as unearned income.

Past Due
Any note or other instrument of indebtedness that has not been paid on the due date.

Payday Loans
A small-dollar, short-term, unsecured loan, often with a high rate of interest, that a borrower promises to repay out of their next paycheck or deposit of funds.

Payee
The individual or organization to whom a check, draft, or note is made payable, typically as a gift or in exchange for goods and services.

Payment Due Date
The date on which a loan or installment payment is due. It is set by a financial institution. Any payment received after this date is considered late and you can be charged late fees and penalties.

Payoff
The complete repayment of a loan, including principal, interest, and any other amounts due, either over the full term of the loan or through earlier payments.

Payoff Statement
A formal statement prepared when a loan payoff is contemplated, showing the status of the loan account, all sums due, and the daily rate of interest.

Payor
The individual or organization that pays or a financial institution upon which a check is drawn and that pays the check or other draft.

Payroll Card
A prepaid card from your employer that is loaded with your paycheck.

Peer-to-Peer (P2P) Payment
A way to send money from a checking account or credit card to another individual’s account through the internet. Many P2P platforms are used on mobile devices, including platforms such as Zelle.

Property that is movable, not fixed permanently to one location. It is not usually taxed like fixed property, and generally includes the tangible and intangible items that people own such as furniture, appliances, artwork, and stocks and bonds.

Policyholder
The individual or firm that acquires and wants protection from the risk and generally in whose name an insurance policy is written. The holder is not necessarily the insured. For instance, life insurance policies might be bought by employers of key employees, or a spouse may buy and be the holder of a life insurance policy on their spouse. In such cases, the buyer is the policyholder.

Postsecondary Education
Postsecondary education includes all forms of schooling after high school, not just college.

Power of Attorney
This document gives someone the power to make decisions about your property, finances, or medical care if you become incapacitated. A durable power of attorney is in force all the time. A conditional power of attorney is in force only if you are unable to take care of your own affairs.

Power of Attorney
This document gives someone the power to make decisions about your property, finances, or medical care if you become incapacitated. A durable power of attorney is in force all the time. A conditional power of attorney is in force only if you are unable to take care of your own affairs.

Preapproval
A comprehensive and rigorous evaluation by a lender that determines if a potential buyer qualifies for a mortgage loan and the maximum amount the lender would be willing to lend. The lender verifies the borrower’s financial and personal information to provide an accurate determination.

Prepaid Debit Card
An alternative banking card that must be loaded with money before it can be used. Only the amount put on the card may be spent. Once loaded, the card can be used like a regular debit card.

Pre-Qualification
A less formal evaluation in which a lender provides a prospective borrower with an estimate of what loan option(s) they may be eligible for. Information provided by the prospective borrower is not usually verified, and pre-qualification is not a formal guarantee of securing a loan at the specified amount or terms.

Previous Balance
The cardholder’s account balance as of the previous billing statement.

Principal
The outstanding balance of a loan, excluding interest and fees; this term also refers to the original sum of money borrowed or invested.

Private College or University
A private college or university is an institution of higher education that is primarily supported by private funds, including nonprofit and not-for-profit schools and schools associated with a religious organization.

Private Mortgage Insurance (PMI)
An insurance policy paid for by a borrower that protects a lender from financial disruption if the borrower defaults on their mortgage loan. PMI is typically required by lenders if the borrower’s down payment is less than 20% of the home’s purchase price.

Private Student Loans
Private student loans are distributed by private organizations, such as banks and credit unions, which set their own terms and conditions and are generally more expensive than federal loans.

Probate
A legal process that determines whether a will is valid and supervises the executor of the estate in distributing property under the terms of the deceased person’s will or according to the state’s intestate laws if there is no will.

Profile Change Alert
This feature notifies you when changes are made to your account profile details, such as your email address, username, or password, helping to identify fraud in its earliest stages.

Progressive Tax Rate
A tax rate based on the taxpayer’s ability to pay, imposing a lower tax rate on low-income earners than on those with a higher income and usually achieved by creating tax brackets that group taxpayers by income ranges.

Proof of Funds
A document or statement – such as an account statement or a letter from a financial institution – that verifies a buyer has the financial means to complete a property purchase.

Property Tax
A tax calculated and levied by the local government where a property is located, based on the value of the property, which can be real estate or tangible personal property.

Public College or University
A public college or university is an institution of higher education whose programs and activities are operated by publicly elected or appointed school officials and that is supported by public funds.

Purchase and Sale Agreement
A legal contract between a buyer and a seller that describes the terms and details of the real estate transaction, such as price, contingencies, and the rights and obligations of both parties.

R

Real Estate
The land and any permanent structures, such as a home or improvements attached to the land, whether natural or manmade. Real estate is a form of real property, which differs from personal property that is not permanently attached to the land, such as vehicles, jewelry, furniture, and farm equipment.

Real Estate Agent
A licensed professional who arranges real estate transactions and acts as the representative of the buyers or sellers in negotiations. Real estate agents work on commission – usually expressed as a percentage of the property’s purchase price – so their income depends on their ability to close a deal.

Real Property
The land and any permanent structures, such as a home or improvements attached to the land, whether natural or manmade. The owner of real property has all the rights of ownership, including the right to possess, sell, lease, and enjoy the property.

REALTOR^®
A licensed real estate agent who is a member of the National Association of Realtors, which maintains a strict code of ethics and provides exclusive access to numerous resources and training to support an agent’s work.

Rebate
A payment to the purchaser that reduces the price of consumer goods. Most rebates require consumers to pay the full cost of an item at the time of purchase, then to send documentation to the manufacturer or retailer to receive a rebate by mail.

Refinancing
The replacement of one loan, such as a mortgage or auto loan, with a new loan that has different terms. Borrowers often refinance to take advantage of a lower interest rate, lower their monthly payments by extending their loan term, or pay off their loan sooner.

Refund
An amount paid back because of an overpayment or for the return of a previously purchased.

Registered Investment Advisor (RIA)
Individuals who are licensed with the state and the U.S. Securities and Exchange Commission to manage investment portfolios and offer investment advice to clients. RIAs, also known as investment advisors, are also fiduciaries, meaning they are legally obligated to act in your best interests.

Robo-Advisor
An automated investment management service that creates and manages an investment portfolio based on computer algorithms. A robo-advisor may be an inexpensive option for managing investments but does not offer other types of financial services.

Roth Individual Retirement Account (Roth IRA)
Unlike a traditional IRA, contributions to this retirement account have already been taxed, so qualified distributions can be made tax-free. Eligibility requirements and annual contribution limits apply.

Routing Number
A nine-digit number that identifies a financial institution, used when clearing funds or processing checks. Larger financial institutions may have multiple routing numbers that are based on the geographic location where the account was opened.

S

Safe Deposit Box
A secured container stored in a vault at a financial institution that only its owner(s) can access and for which they pay an annual fee. A safe deposit box may be used to safeguard items such as valuable jewelry, keepsakes, or important documents.

Salary
Compensation received by an employee for services performed. A salary is a fixed sum paid for a specific period of time worked, such as weekly or monthly, usually expressed as an annual sum.

Save
The act of setting something, like money, aside to use in the future.

Savings
Money set aside in a secure place, such as in a bank account, that can be used for future emergencies or purchases.

Savings Account
An account at a financial institution that usually pays interest. A depositor may use a savings account to hold money for long-term goals or emergencies.

Savings Goal
Goals that can take less than three years to achieve.

Scholarships
Money given to students based on academic or other achievements to help pay education expenses. Scholarships generally don’t have to be repaid.

Secured Credit Card
Credit card that typically requires a cash security deposit. The larger the security deposit, the higher the credit limit. Secured cards are often used to build credit history.

Seller Concession
An expense that the seller of a property agrees to pay on behalf of the buyer of the property to facilitate the sale. Concessions may include closing costs, a home warranty, or prepaid property taxes.

Seller Disclosure
A statement where the seller of a property is legally required to disclose the property’s known defects or details of its condition, including past repairs, frequent issues, previous contamination, and maintenance records.

Services
Actions that a person or entity performs for a customer, such as cutting hair, giving a medical checkup, or fixing a car.

Short-Term Goals
Goals that can take a short time, up to five years, to reach.

Signature Card
A card signed by each depositor and customer of a financial institution that may be used as a means of identification. The signature card represents a contract between the financial institution and the depositor.

Single Transaction Alert
This feature notifies you of transactions that, based on your customized settings, exceed a specified amount, to catch unauthorized transactions or prevent overspending.

SMART Goals
Goals that are specific, measurable, attainable, relevant, and timebound.

Spend
The act of using money to buy goods or services.

State Income Tax
A tax levied by most states on the income of state residents and on the state-sourced income of nonresidents.

Stop Payment
A request made to a financial institution to deny or cancel a check or payment that has not yet cleared. Most financial institutions charge a fee for this service.

Student Aid Report
A student aid report is a paper or electronic document that gives students and their families some basic information about their eligibility for federal student aid and lists the student’s answers to FAFSA questions.

Student Loan Servicer
A student loan servicer is a company that to track loans while borrowers are in school, respond to borrowers’ questions, collect student loan payments when the student has left school, and perform other tasks associated with loans.

Subject to Inspection
A stipulation in a purchase agreement that allows the buyer to modify or withdraw their offer without repercussion if a home inspection reveals problems with the property.

Subscription
An agreement that a consumer makes with a company to receive a product or service regularly, which is usually paid for in advance.

Substitute Check
A substitute check is a paper copy of the front and back of the original check made by a financial institution that may legally be used in lieu of the original check. A substitute check is slightly larger than a standard personal check so that it can contain a picture of the original check.

Supplemental Security Income
A federal program administered by the Social Security Administration that provides monthly payments to adults and children with disabilities, including blindness, whose income and resources fall below specific financial limits. SSI payments are also made to people aged 65 and older without disabilities who meet the financial qualifications.

Supply
A measure of the amount of specific goods or services that is available to consumers at a specific price or across a range of prices. Decreases in the price of a good or service will usually increase the quantity demanded; conversely, an increase in the price of a good or service will hinder demand.

T

Tariff
A tax on products imported from foreign countries, which can increase the cost of those products and which ultimately can be passed on to consumers in the form of higher prices.

Taxable Income
The portion of a taxpayer’s gross income used to calculate how much tax is owed in a given tax year. It can be described broadly as adjusted gross income (AGI) minus allowable itemized or standard deductions. Taxable income includes earned income, as well as investment income and various other passive income.

Tax Credit
An amount that taxpayers can subtract directly from the taxes they owe. Unlike deductions, which lower the amount of taxable income, tax credits reduce the actual amount of tax owed or increase the amount to be refunded. Certain types of tax credits may be granted to individuals or businesses in specific locations, classifications, or industries.

Tax Deduction
An amount (often a personal or business expense) that reduces income subject to tax, lowering the amount of taxes owed. An individual can choose a standard deduction – a single deduction at a fixed amount – or itemize deductions on Schedule A of a federal income tax return.

Tax Rate
The percentage at which an individual or corporation is taxed. Both the federal government and many states use a progressive tax rate system.

Tax Refund
Money owed to taxpayers by the government when their total tax payments are greater than the total tax.

Tax Relief
Any government program or policy designed to help individuals and businesses reduce their tax burdens or resolve their tax-related debts.

Tax Return
A form or forms filed with a tax authority that reports income, expenses, and other pertinent tax information. Tax returns allow taxpayers to calculate their tax liability, schedule tax payments, or request refunds for the overpayment of taxes. In most countries, an individual or business with reportable income must file tax returns annually.

Tax Season
The time period, generally between January 1 and April 15 of each year, when individual taxpayers traditionally prepare financial statements and reports for the previous year and submit their tax returns. Tax returns submitted after the end of tax season are subject to late penalty fees and interest charges.

Taxes
Mandatory payments of money by individuals or corporations to federal, state, or local governments, which use the funds to provide public goods and services for the benefit of the community as a whole.

Taxpayer
An individual or business entity that is obligated to pay taxes to a federal, state, or local government.

Term Life Insurance
A type of death benefit that the policyholder pays premiums for throughout a specified period of time. Once the term expires, the policyholder can either renew it for another term, convert the policy to permanent coverage, or allow the term life insurance policy to lapse. If the policyholder dies during the specified period, their beneficiaries receive payment.

Testator
A person who makes and signs a will directing the disbursement of their estate.

Tip
An optional or extra payment a customer gives to an individual who provides them with a service. Also called a gratuity.

Tip Income
Money and goods received from customers for services performed by food servers, baggage handlers, hairdressers, and others. Tips are in addition to the stated amount of the bill and given voluntarily. Individuals who earn tips are expected to report them and pay applicable taxes on the amount.

Title
A term or concept describing the rights of the owner of an asset; a deed is the document that transfers legal ownership to the asset.

Title Search
The process by which a title company or attorney examines public records, usually during a real estate transaction, to ensure that no claims, liens, or problems with a property exist that could result in third party asserting that they have a stake in the property.

Travel Insurance
A type of insurance that covers the costs and losses associated with unexpected events that may occur before or during a trip, including baggage loss, cancellation, and illness or injury, depending upon the coverage selected.

Trust
A document that creates a three-way relationship between the trustor (you), the trustee (someone you appoint), and the beneficiary. Authority is delegated to the trustee to manage assets on behalf of a beneficiary. Assets held in a trust do not go through probate, and a trust can provide some tax advantages and privacy.

Trustee
An individual or organization you choose to manage your trust. A trustee controls and invests trust assets and distributes benefits, depending on the terms of the trust.

Trustor
A person who creates or contributes property and assets to a trust. For example, if you put money in a trust for your children to receive when they turn 18, you are a trustor. Also known as a grantor, settlor, or donor.

U

Unauthorized Use
Transactions to your ATM, debit, or credit card that you didn’t make or approve (such as withdrawals, transfers, purchases, or charges) and for which you received no benefit.

Uncollected Funds
The unavailable portion of a deposit balance from checks that have not yet been cleared by the depository financial institution.

Universal Life Insurance
Life insurance that lasts for the lifetime of the insured and that has an investment savings element and low premiums similar to those of term life insurance. Most universal life insurance policies contain a flexible-premium option; however, some require a single, lump-sum premium or scheduled fixed premiums.

Unusual Activity Alert
This feature alerts you when unusual activity, such as transactions from a foreign country or at an unusual time, occurs on your account, helping you to identify and prevent fraudulent activity.

Upcoming Payment Alert
This feature notifies you of upcoming payments due on your account, such as credit card bills, loan payments, subscriptions, utility bills, and other recurring charges, helping you to avoid missed payments and late fees.

USDA Home Loan
A home loan or guaranteed loan offered by the U.S. Department of Agriculture to encourage thriving communities in rural areas. With USDA direct home loans, the USDA itself provides the funds to the homebuyer. With a USDA guaranteed loan, a private lender provides the funds, and the USDA backs the loan to protect against default.

V

VA Loan
A mortgage loan that’s guaranteed by the U.S. Department of Veterans Affairs and typically offers favorable rates and terms for eligible borrowers. These loans are available exclusively to active-duty military and veterans and their spouses.

Value
The money, material, or assessed worth of an asset, good, or service.

Value-Added
The additional features or economic value that a producer adds to its products and services before offering them to customers.

W

Wage
Compensation received by employees for services performed. Usually, wages are computed by multiplying an hourly pay rate by the number of hours worked. Wage earners may earn overtime – a multiple of the hourly rate – for time worked beyond their normal working hours.

Wants
Upgrades and other things that would be nice to have but aren’t necessary for living, earning, or protecting assets.

Warranty
A service contract that covers part or all of the costs to replace or repair a property’s covered systems and appliances (like the roof, plumbing, HVAC, refrigerator, and stove) that fail because of normal wear and tear within a set time period. Home warranties differ from homeowners insurance, which protects against events like fire or storm damage, and from structural warranties, which cover newly built homes.

Wealth Advisor
An individual who offers financial planning and investment advice to high-net-worth clients.

Whole Life Insurance
Also known as traditional life insurance, this type of insurance provides a death benefit coverage for the entire life of the insured and includes a savings component in which cash value may accumulate. Interest accrues at a fixed rate and on a tax-deferred basis.

Will
The primary instrument for distributing your assets when you die. You can choose an executor to ensure that your wishes are carried out, and you can also choose a guardian for your children if you die before they turn 18. A will does not control your life insurance proceeds, property owned through joint title, or assets held in a living trust.

Wire Transfer
A fast, secure way to move money electronically from one person to another, domestically or internationally.

Withholding Taxes
Money that employers withhold from employees’ paychecks. Employers withhold money for federal income taxes, Social Security and Medicare taxes, and state and local income taxes in some states and localities. Withholding reduces the amount of tax that employees must pay when they file their annual tax returns. The employee’s income, marital status, number of dependents, and number of jobs all determine the amount withheld.