Find a Location



By: AgFed Credit Union

Welcome to AgFed Credit Union's MoneyDig blog! 

Get confident about your personal finances with a number of articles, tips, advice and more.


15 Financial Terms You Need to Know

 May 05, 2021
(not rated)
| 0

We know that not everyone is as fluent in credit union and financial lingo as we are. We’ve even seen our own members get a little lost in all the financial terms that come with being part of a credit union.

If you’re used to just nodding your head when someone busts out the financial jargon, have no fear! We’ve compiled a list of 15 common and useful terms to help you navigate the Jargon Seas.

Terms for Accounts and Cards

Credit limit – the maximum amount of credit a financial institution will extend for use. This most often refers to the maximum balance you can carry on your credit card before it’s “maxed out.”

Credit Score – a number, roughly between 300 and 800, measuring an individual's credit worthiness. The most well-known type of credit score is the FICO® score. This score is derived from a mathematical formula that assigns numerical values to various pieces of information in your credit report.

Phishing – When internet fraudsters impersonate a business in an attempt to trick you into giving out your personal information, such as usernames, passwords, and credit card details. Legitimate businesses do not ask you to send sensitive information through insecure channels.

Individual Retirement Arrangement (IRA) – an account that allows an individual to save for retirement in a tax-advantaged way. Two common types of IRAs are Traditional and Roth, and they have different tax implications.

Share Account – Credit unions sometimes call savings accounts Share Accounts because at a credit union you are a part owner. By example, if you own stock in a company, you own a share. If you have an account at a credit union, you have a share account.

Annual Percentage Yield (APY) – the amount of dividends earned on a deposit account (checking, savings, money markets, CDs, IRAs), including the effect of interest compounding, expressed as a yearly percentage and assuming funds remain in the account for at least one year.

General Loan Terms

Annual Percentage Rate (APR) – the rate of interest that covers the total cost of the loan. This includes the interest rate, fees, points, and other directly related costs.

Fixed Rate Loan – loans that have an unchanging rate of interest. Both the interest rate and the monthly payments (for principal and interest) stay the same during the life of the loan.

Variable Rate Loan – a loan with an interest rate that may change over the life of the loan. This change happens according to the changes in an index rate, such as the prime rate.

Loan To Value (LTV) – a financial term used to express the ratio of a loan amount to the value of what you buy with the loan. For instance, if someone borrows $130,000 to purchase a house worth $150,000, the LTV ratio is $130,000 to $150,000 or $130,000/$150,000, or 87%.

Member Loan Protection – a voluntary loan-payment protection product that helps you get relief from the financial burden of delinquency or default if a protected life event unexpectedly happens to you.

Guaranteed Asset Protection (GAP) Insurance – an insurance policy taken out at the time of an auto loan to cover the difference between what your insurance company will pay if the auto is totaled, and any remaining payoff balance.

LifeLine of Credit – this is AgFed’s name for a revolving line of credit loans that does not have a fixed number of payments. As you pay the balance, the funds once again become available for use.

Route 66 Extended Warranty® – protects your wallet from any unforeseen mechanical issues. This plan pays for parts and labor for any covered repair. Route 66 Extended Warranty® begins on the date of purchase and continues after your manufacturer's warranty expires.

Terms Specific to Mortgages (Home Loans)

Adjustable-Rate Mortgage (ARM) – a mortgage that does not have a fixed interest rate. ARMs usually offer a lower initial interest rate than fixed-rate loans. The interest rate changes over the life of the loan based on market conditions, but the loan agreement generally sets maximum and minimum rates.

Equity – The difference between what you owe on your mortgage and what your home is currently worth. If you owe $100,000 on your mortgage loan and your home is worth $150,000, you have $50,000 of equity in your home.

Home Equity Line of Credit (HELOC) – a line of credit secured by the equity in a member's home. It is typically used for home improvements, debt consolidation, and other major purchases.


post a comment / show comments

Rate this Blog

Add a Comment


No comments have been posted to this Blog