Office of Financial Empowerment
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Money Dictionary

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Cash Advance Fee   A fee that a credit card company charges when you use your card to obtain cash. It can be a flat fee (for example, $5 for cash advances under $1,000) or a percentage of the cash advance (for example, 2% of the cash advance).
Cash Advance Loan   A small, short-term, high-interest loan that is offered in anticipation of a future lump sum of cash from a paycheck or tax refund. The most common forms of cash advance loans are payday loans and tax refund anticipation loans (RALs).
Certificate of Deposit (CD)   CD is a type of investment that allows you to deposit money for a set period of time, such as six months, one year, or two years at a guaranteed fixed interest rate. If you withdraw your money before the agreed-upon time period, you will be charged a penalty fee.
Check Cashing Outlet   Place that charges a fee for cashing government, payroll or personal checks.  Many people go to check cashing outlets because they do not have a bank or credit union account which would allow them to deposit checks.
Checking Account   An account that allows you to deposit money, withdraw money, and write checks to pay for purchases.
Clearance   The process of transmitting, reconciling, and, in some cases, confirming payment orders or financial instrument transfer instructions prior to settlement.
Collateral   Property that is used to secure a loan or other credit that can be subject to seizure on default. For example, Judy uses her car as collateral for a $10,000 loan. If she is unable to repay the loan, the bank can take away her car.
Compound Interest   Interest charged on the principal amount (original amount borrowed) and on the interest accrued during the length of the agreement for a loan or an account.
Cosigners   People who pledge to repay your loan if you cannot.
Credit   Credit is the ability to borrow money with the promise to repay it at a later date. Credit is not free. It allows you to buy things when you don't have cash immediately available, but you will be charged interest and fees for using credit.
Credit Card   A credit card allows you to buy things and pay for them over time. Buying with credit is a loan; you have to pay back the money borrowed. Be sure to pay your credit card bills in full each month or else you will be subject to late fees and high interest rates.
Credit Counseling   A credit counselor helps consumers with financial problems. Counseling usually involves developing a spending plan to pay off debt.
Credit History   A record of all of your credit-based transactions. If you have ever applied for a credit card, an auto loan, or a loan from a bank, then you have a credit history.
Credit Report   A report detailing your credit history. All lenders use a credit report to determine your credit history and evaluate your record of repaying credit.
Credit Score   A credit score is a number determined by your credit report. Like a test score, the higher the score, the better your credit. A good credit score will help you take out loans more easily and even get better interest rates. All three credit reporting companies (Equifax, Experian, TransUnion) use VantageScore to determine credit scores.
Credit Union   A nonprofit, community-based financial institution that offers many of the same services as a bank.
Debit Card   A debit card allows you to access the money in your checking or savings account electronically to make purchases. For example, if you have $100 in your savings account and use your debit card to make a $20 purchase, you will then have only $80 left in your savings account.
Debt   An obligation to repay an amount you owe - also known as loans or liabilities.
Debt Collection Agencies   Companies that regularly collect debts owed to others. They either own the debts (purchased from creditors, such as car dealers) or they assist companies in collecting debt from their customers.
Default   Failure to meet the terms of an agreement. For example, Cindy and ZZ Bank have a loan agreement in which Cindy pays $50 for five years for borrowing $2,000 from ZZ Bank. Cindy doesn't repay ZZ Bank and, therefore, has defaulted on her loan.
Dependent   For tax purposes, a dependent is a person other than the taxpayer or taxpayer's spouse who entitles the taxpayer to claim a dependency exemption.
Deposit   To put money in an account.
Depreciation   The decline in the value of an asset. For example, a car can depreciate over time due to its usage.
Direct Deposit   Electronic deposits or credit - usually via Automated Clearing House (ACH) - to an individual's bank account. Common uses of direct deposit include payroll payments; Social Security benefits; and income from investments, such as CDs, annuities, and mutual funds.
Diversification   The act of spreading your money across different investments to reduce risk.
Dividend   A distribution of money made by a corporation to its shareholders out of its earnings and profits.

OFE's Reference List for Money Dictionary