PERSONAL FINANCE GLOSSARY

ACH (Automated Clearing House)

ACH is an electronic network for financial transactions in the United States. Rules and regulations that govern the ACH network are established by NACHA and the Federal Reserve. This network allows for the instant transfer of money between financial institutions. They operate usually only on weekdays, which is why you’ll see disclaimers like "next business day."

ACH AUTHORIZATION

Providing a financial institution with ACH Authorization means you are providing written permission for your lender to deposit or withdraw specific dollar amounts on specific dates directly to or from your bank account. This process allows you to make automatic payments and avoid missing a due date. 

APR (Annual Percentage Rate)

A loan's annual percentage rate, or APR, is what credit costs you each year. It is expressed as a percentage of the loan amount. The APR includes the interest payable on the amount you borrow plus other fees as an annual rate of charge.

ARREARS

Being in arrears means being past due on a debt. This occurs after missing one or more loan payments.
Note: It can prevent you from qualifying for future credit, so talk to your creditors before the situation deteriorates further.

ASSETS

Assets are anything you own that has financial value like cash, property, stocks, bonds and even home electronics.

BALANCE

A balance can be the amount of money in your bank account. It can also indicate how much you owe a lender to pay off a loan. 

BOUNCED CHECK

A check "bounces" when your bank account doesn’t have enough funds to cover payment. (See NSF below) The bank returns the check to the payee — unpaid. Now, in addition to still owing the intended recipient money, the bank will likely charge you a substantial fee.

BUDGET

Simply stated, it’s a way to stay on track financially. Keeping a budget is one of the best things you can do to stay on top of your finances. It tracks your cash inflow (paycheck, interest and other income) vs. outflow (rent, groceries, gas, utilities and other expenses), so you can forecast your financial standing.

CASH ADVANCE

A cash advance is money given based on a prearranged line of credit such as a credit card or loan agreement. It can also describe a small loan made over a short period of time.

CASH LOANS

A cash loan is a loan given to a borrower in cash. These loans can include payday loans, peer-to-peer loans among family and friends and business loans. Cash loans often include interest payments and forms to complete, though some may be less formal.

CHARGES

Charges are fees given to customers for various services and resources made available. Fees include interest charges, handling charges, and cash advance charges. Additionally, if their services are misused or terms are broken, many institutions assess penalties, including overdraft charges, bounced check fees and late payment fees.

CLEARING CYCLE

Checks and electronic payments go through a clearing cycle when paid into your account. The time varies based upon the type of credit.

CREDIT BUREAU

A credit bureau, or credit reporting agency, collects data from numerous sources and provides information on individual consumers. Lenders use this information, sometimes in the form of a credit rating, to help them assess the credit worthiness and likelihood that someone will pay back a loan. Examples of credit bureaus are Trans Union, Experian and Equifax.

CREDIT LIMIT

Your credit limit is the maximum amount of money you can borrow. The lender typically determines this amount based on a number of factors, including your credit score and credit report.  At RISE we use proprietary scoring models to offer you a line amount with payments that are affordable and at the lowest possible APR.

CREDIT REPORT

A Credit Report is a document that summarizes your credit history, including information from credit bureaus, banks, retailers and collection agencies. It can also include details of your borrowing, applications for credit, court judgments and bill payment behavior. You are entitled to a free copy of your credit report from each of the three major credit bureaus (Trans Union, Experian and Equifax) once a year, but you have to request them through the Annual Credit Report Request Service (www.annualcreditreport.com or 877-322-8228).

CREDIT SCORE

Credit scores (or credit ratings) are used by financial institutions to help them assess the credit worthiness of an individual, corporation, or even a country. They are typically based on a number of factors including financial history, current assets and liabilities. A credit rating often indicates the probability a subject will be able to pay back a loan. RISE offers free Financial Wellness to help you understand how to maintain a good credit rating.

CREDIT UTILIZATION

Credit utilization refers to the amount of credit you have used compared to your available credit limit. Credit utilization can fluctuate throughout your billing cycle as you use your credit line.

DEBT

Any money owed to an individual, company or other organization. One acquires debt when one borrows money. RISE customers can learn about healthy ways to manage debt by visiting our Financial Wellness page.

DEBT CONSOLIDATION

Debt consolidation is a form of debt refinancing. Typically, your debt is paid off using a new loan which consolidates all of your debt into one more manageable payment, often with a reduced interest rate compared to credit cards or other high interest loans.

EARLY REPAYMENT

Paying back on a loan before it’s due. Some banks charge fees for paying back a loan before the arranged due date. Not with RISE — you can pay off your loan in installments or all at once — anytime without penalties.

EMERGENCY FUND

An emergency fund is money set aside, typically in a savings account, to be used in a financial emergency. Most experts recommend building an emergency fund equal to six months of household expenses.

FIXED-RATE INTEREST

Fixed-rate interest remains the same throughout the entire loan term.

GROSS INCOME

Your gross income is the amount your employer pays you before taxes, insurance, retirement contributions and other withholdings are deducted. (The larger of the two income numbers on your paycheck.)

HANDLING CHARGE

Handling Charges can be the amount charged when setting up and maintaining credit accounts. For loans originated in Mississippi, a Handling Charge is the amount you pay on money you borrow. Handling Charge is expressed as a percentage of principal outstanding and is included in the total cost of a loan.

INTEREST

Interest can be the amount you earn on your savings and investments. Interest is also the amount you pay on money you borrow. Commonly expressed as a percentage, interest is often included in the total cost of a loan. (See APR above).

INSTALLMENT LOANS

An installment loan is a borrowing agreement involving a loan that is paid back over several regular installments, such as mortgages and personal loans. Payments are typically monthly, though some loans may be repaid biweekly. Installment loans can have terms as short as two months or as long as 30-years.

LOAN

A loan is the extension of money from one party to another with the agreement that the money will be repaid. Nearly all loans (except for some informal ones) are made at interest, meaning borrowers pay a certain percentage of the principal amount to the lender as compensation for borrowing. Most loans also have a maturity date, by which time the borrower must have repaid the loan. There are several types of loans, including a quick and convenient installment loan from RISE.

LOAN AGREEMENT

This legal document makes a loan official by formalizing terms of the loan between you and your lender including the APR, interest rate and repayment period. When you sign a loan agreement, you enter into a contract that holds you responsible for paying back the money borrowed plus interest and fees.

LOAN PERIOD

The loan period is the length of time you have to repay borrowed money. It can last any number of days up to years depending upon the terms of the agreement. In most cases, interest continues to accrue throughout this repayment period.

LINE OF CREDIT

A line of credit is a form of a loan consumers can access repeatedly. For example, a home equity line of credit can be drawn from again and again as homeowners make improvements on their home. A line of credit will carry a monthly interest rate and monthly payments.

NET INCOME

This is your "take-home pay," or the amount remaining after all deductions, such as taxes, insurance and retirement contributions have been subtracted from your gross income. (The smaller of the two income numbers on your paycheck.)

NSF (Non-Sufficient Funds)

NSF means you didn’t have enough money in your checking account to cover all checks and/or electronic withdrawals. Depending on your state of residence, RISE will charge an NSF fee if we receive an NSF on your payment. Unfortunately, your financial institution will also most likely assess you with additional fees or penalty charges.  To learn more about how to better manage you debt, visit our Financial Wellness page.

ONLINE BANKING

Online banking (internet banking) refers to banking services available via the web. These programs vary by bank or financial institution and typically allow you to check your balance, order checks, pay bills, make a cash transfer and perform other services.

ONLINE LOANS

An online loan is loan provided by an online lender. Most online loans are unsecured, meaning the loan is not backed by collateral such as your home or personal property. Most loans are also conducted entirely online.

OUTSTANDING BALANCE

This is the amount that remains to be paid back on a loan. For example, when you make regular payments on or before the due date, your outstanding balance goes down with each installment. If your payment is late, interest will continue to accrue on the unpaid principal balance, which may cause your outstanding balance to increase.

PAYDAY LOAN

A payday loan is a short-term loan intended to cover unexpected expenses that can’t wait until your next paycheck is received. Lenders typically charge a fixed fee based on the amount borrowed and you have until your next payday to pay it off — regardless of when you apply. Payday loans often help people who can’t get credit elsewhere but they can be costly.  Consider alternatives like RISE for lower APRs coupled with Financial Wellness tools like Credit Score Plus which can help you to better manage your credit.

PAYDAY ADVANCE

Another common term that means the same as a payday loan.

PENALTY CHARGES

These fees are typically assessed after you have broken the terms of your agreement for things like bounced checks or Non-Sufficient Funds (NSF).

PROMISE DATE

This is the date you say you’ll repay your loan or make a payment on your loan.

RATE

Rate refers to the level of interest charged by a lender — usually expressed as an annual rate of interest.

RENOVATION LOAN

A renovation loan is designed to cover the cost of home renovations upfront. Typically, renovation loans are installment loans with a fixed interest rate and set monthly repayment terms. These loans can be backed by the federal government, such as a Federal Housing Administration 203(k) loan, or issued by private lenders.

TRANSACTION

A transaction is the movement of money from one party to another. When you withdraw cash from your account or make a loan payment, you are completing a transaction.

UNDERPAYMENT

A loan payment that is less than the amount you agreed to pay on a specific date, per the terms of your loan agreement.

UNSECURED LOAN

An unsecured loan is a loan not tied to personal collateral such as your home or personal property. Unsecured loans carry more risk to the lender so the interest rates may be higher than secured loans. Most unsecured loans are installment loans, designed to be paid back over time.