A Financial Glossary

Isn’t it strange how there are some terms we are just supposed to know? We hear financial jargon thrown around and we nod our heads in agreement but aren’t sure what the heck is going on. Don’t you wish you had a financial glossary to help untangle those tricky terms? You’re in luck! We’ve got one right here.

Loan Interest

This is the amount that you will pay when you borrow money. Say you want a car, but you don’t have the funds you need. You borrow money from a financial institution to pay for the car and then based on your interest rate you will pay back an amount in addition to the initial amount you borrowed. In this case, the lower the rate the better. The amount of interest charged is called is also known as the Finance Charge.

FICO Score

Also known as a Credit Score. This number is based on your experience in the financial world. What does your repayment history look like? Do you have revolving credit? (Credit cards or lines of credit are examples.) Are you using your credit responsibly? All of these factors give lenders an idea of how risky it is to lend to you. This is not the only factor that goes into lending decisions. If you are curious about your FICO Score, and how it may affect your lending chances, talk to Old Ocean Federal Credit Union.

Income

This may seem like a straightforward entry, but some facets are often left out, especially when creating a budget. For instance, your income includes paychecks, social security, child support, interest payments on savings, rental income, or anything else that adds to your account balances.

Expenses

Alternatively, expenses include anything that deducts from your account balances. Some examples of expenses are rent, food, utilities, phone, entertainment, or anything else that would cause a deduction from your account. A great way to keep track of your expenses is to make a budget. We can help!

Phishing

A type of scam, fraudsters pose as a financial institution for a sense of familiarity and ask for your information. Stay vigilant! If you think you may have been a target or victim of any type of fraud, please contact us as soon as you can.

Lien

This is a legal claim on a property. The lien holder is paid until the loan matures (is paid off).

Principal Balance

The amount remaining to pay back to your financial institution without any fees or finance charges factored in.

Fixed Rate

An interest rate on borrowed funds or saved funds, determined for the life of the product.

Variable Rate

This is a rate for borrowed funds or saved funds that may change during the life of the loan or account.

This is but a sample of terms and phrases you may experience when dealing with your finances. If you have been wondering about a term or concept, please ask! We are always here to help you make the best decisions you can. Always remember… knowledge is power!

Sources:

https://www.indeed.com/career-advice/career-development/financial-terms-to-know

https://www.helpwithmybank.gov/glossary/index-glossary.html