Glossary For Personal Financial Literacy

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An announcement-usually paid-of a product's or service's benefits that is intended to encourage its purchase.

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advertising

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An item with economic value that an individual or organization owns, such as stocks, real estate, personal property, and business equipment.

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asset

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The percentage cost of credit on an annual basis, which must be disclosed by law.

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annual percentage rate
(APR)

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The annual rate of return on an investment, which must be disclosed by law and which varies by the frequency of compounding.

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annual percentage yield
(APY)

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A computer terminal used to conduct business with a financial institution or purchase items such as postage stamps or transportation tickets; also known as a cash machine

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(ATM)

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A state of being legally released from the obligation to repay some or all debt in exchange for the forced loss of certain assets. A court's determination of personal bankruptcy remains in a consumer's credit for 10 years.

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bankruptcy

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A revison of bankruptcy law to make the system fairer for creditors and debtors and make affordable credit available to more people.

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Bankruptcy Abuse Prevention
and Consumer Protection Act

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A state or federally chartered for-profit financial institution that offers commercial and consummer loans and other financial services

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bank

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A person or organization named to receive assets after an individual's death.

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beneficiary

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A certificate representing the purchaser's agreement to lend a business or government money to the promise that the debt will be paid-with interest-at a specific time.

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bond

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1. A spending plan.
2. A record of projected and actual income and expenses over a period.

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budget

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A description of a company's organizational structure, staff, activities, and marketing and financial plans, including expected sources of income and expenses.

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business plan

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Income that results when the selling price of an asset is greater than the original purchase price.

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capital gain

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Monetary loss that occurs when the selling price of an asset is less than the original amount invested.

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capital loss

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A profession or field of employment for which one studies or trains, such as financial sevices or medicine.

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career

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A state or federally chartered for-profit financial institution that offers commerical and consumer loans and other financial services.

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bank

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A summary of receipts and payments for a given period, helpful when preparing a budget: also known as an income and expense statement.

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cash flow statement

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Aid to those in need.

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charitable gift

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A specific-purpose loan requiring repayments with interest and any other finance charges by specific date. Examples include most mortgages or auto loans.

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closed-end-credit

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Property that a borrower promises to give up to a lender in case of default.

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collateral

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Physical objects-such as fine art, stamps, and antiques - that an investor buys in hope that they will grow in value.

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collectibles

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A business that specializes in obtaining payments from debtors who have defaulted on their loans.

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collection agency

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The process of seeking information about products and services to find the best quality or utility at the best price.

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comparison shopping

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Payment and benefits for work performed; also payment to injured or unemployed workers or their dependents.

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compensation

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An expression of dissatisfaction with a product or service, often in the form of a letter to the seller or manufacture documenting the problem and stating the desired solution.

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complaint

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Calculating interest on both principal and previously earned interest.

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compounding

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A legally binding agreement between two or more parties.

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contract

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An agreement to provide goods, services,or money in exchange for future payments with interest by a specific date or according to a specific schedule. The use of someone else's money for a fee.

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credit

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A plastic card that authorizes the delivery of goods and services exchanged for future payment with interest, according to a specific schedule.

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credit card

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An organization that provides debt and money management advice and assistance to people with debt problems.

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credit counseling service

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An official record of a borrower's credit history, including such information as the amount and type of credit used, outstanding balances, and any delinquencies, bankruptcies, or tax liens.

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credit report

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A statistical measure of a loan applicant's creditworthiness, which is the likelihood of repayment.

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credit score

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A state or federally charter not-for-profit financial cooperative that provides financial services to its member-owners, who have met specific employment, residence, or other eligibility requirements.

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credit union

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The presumption that a specific borrower has sufficient assets, income, and/or inclination to repay a loan.

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creditworthy

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A method of selecting a course of action after gathering and evaluating information and considering the costs and benefits of various alternatives and consequences.

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decision making, systematic

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A plastic card that provides access to electronic funds transfer (EFT) from an automated teller machine (ATM) or a point-of-sale (POS) terminal.

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debit card

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Something owed, usually measured in dollars.

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debt

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The dollar amount or percentage of a loss that is not insured, as specified in an insurance policy.

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deductible

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The failure to meet a financial obligation or agreement.

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default

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A person who relies on another individual for support.

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dependent

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Gross pay minus deductions for taxes.

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disposable income

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A strategy for reducing some types of risk by selecting a wide variety of investments.

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diversification

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Earnings from corporate stock or credit union share accounts.

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dividends

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A method of investing a fixed amount in the same type of investment at regular intervals, regardless of price.

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dollar-cost averaging

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Earnings from employment, including commissions and tips.

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earned income