Glossary - C

A check that a financial institution paid, charged to the account holder's account, and then endorsed. Once canceled, a check is no longer negotiable.

A check drawn on the funds of the financial institution, not against the funds in a depositor's account. However, the depositor paid for the cashier's check with funds from their account. The primary benefit of a cashier's check is that the recipient of the check is assured that the funds are available.

A personal check drawn by an individual that is certified (guaranteed) to be good. The face of the check bears the words "certified" or "accepted," and is signed by an official of the financial institution issuing the check. The signature signifies that:

• the signature of the drawer is genuine, and
• sufficient funds are on deposit and earmarked for payment of the check.

A charge card is a unique type of credit card. The balance on a charge card account is payable in full at the end of each billing cycle and cannot be carried over to the next. Charge cards don’t have an interest rate, but steep penalties can be assessed if the full balance isn’t paid by the due date. Charge cards usually have an annual fee. While they don’t allow cash advances, they often come with additional benefits not offered by other credit card issuers. Some charge cards don’t have a preset credit limit, though a reasonable spending limit is determined based on the cardholder’s income, spending and payment habits. American Express is a well-known organization that offers a charge card.

The balance on a loan, or negative share draft account, that a financial institution no longer expects to be repaid and writes off as a bad debt.

A unique number assigned to the credit union by NCUA, You can find a specific credit union’s charter number by visiting, https://mapping.ncua.gov/ResearchCreditUnion.

A written order instructing a financial institution to pay immediately on demand a specified amount of money from the member's account to the person named on the check or, if a specific person is not named (e.g. written to “Cash”), to whoever bears the check to the institution for payment.

Check 21 is a Federal law designed to enable financial institutions, banks, and businesses that receive checks as payment to convert the check to an electronic payment (ACH), which is intended to make check processing faster and more efficient. Check 21 is the short name for the Check Clearing for the 21st Century Act, which went into effect on October 28, 2004.

A demand deposit share account subject to withdrawal of funds by check. Credit unions refer to a checking account as a share draft account.

The ChexSystems, Inc. network is comprised of member financial institutions that regularly contribute information on mishandled checking and savings accounts to a central location. ChexSystems shares this information among member institutions to help them assess the risk of opening new accounts.

If you close an account with a negative balance and the financial institution writes your account off to bad debts, it may report your activity to ChexSystems which can make it difficult to open an account at another financial institution. Generally, information remains on ChexSystems for five years.

Generally, any loan in which the amount given to the borrower, plus any finance charges, is expected to be repaid in full by a specified date. Most real estate and automobile loans are closed-end loans.

The consummation of a contractual real estate transaction in which all appropriate documents are signed and the proceeds of the mortgage loan are then disbursed by the lender.

The expenses incurred by sellers and buyers in transferring ownership in real property. The costs of closing may include an origination fee, discount points, attorneys' fees, loan fees, title search and insurance, survey charge, recordation fees, and the credit report charge.

Assets that are offered to secure a loan or other credit. For example, if you obtain a real estate mortgage, the credit's collateral is typically your house. Collateral becomes subject to seizure on default.

A type of property insurance that protects the lender’s interest in collateral securing a loan. It is not a substitute for comprehensive and collision coverage on a vehicle. If a borrower has a vehicle loan and fails to obtain or maintain the proper insurance coverage required by the loan agreement, the lender can purchase CPI and add the premium for it to the loan balance. In most cases, this action increases the loan payments to cover the cost of the insurance. CPI can also be added to a loan when vehicle insurance changes or lapses, or the vehicle title does not name the lender as lienholder during the life of the loan.

A company hired by a financial institution to collect a debt that is owed. Creditors typically hire a collection agency only after they have made efforts to collect the debt themselves, usually through letters and telephone calls. How the collection agency interacts with you in the collection of the debt is regulated by the Fair Debt Collection Practices Act.

A person who signs a loan note made with another person and is jointly liable with the maker for repayment of the loan. (Can be interchangeable with co-signer.)

Compound interest is the interest paid on a deposit or share account, which is added to the account balance at the end of the dividend period. Compounding occurs during the next dividend period when you earn dividends or interest on the dividend credited to your account at the end of the prior dividend period.

A service that specializes in working with consumers who are overextended in debts and need to make repayment arrangements with creditors.

An agency that regularly collects or evaluates individual consumer credit information, or other information about consumers, and sells consumer reports for a fee to financial institutions and or others creditors.

Mortgage loans other than those insured or guaranteed by a government agency such as the FHA (Federal Housing Administration), the VA (Veterans Administration), or the Rural Development Services (formerly known as the Farmers Home Administration or FmHA). A fixed-rate mortgage offers you a set interest rate and payments that do not change throughout the life, or "term," of the loan. A conventional fixed-rate mortgage loan is fully paid off over a given number of years-usually 15, 20, or 30. A portion of each monthly payment goes towards paying back the money borrowed, the "principal"; the rest is "interest."

An individual who signs the note of another person as support for the credit of the primary signer and who becomes responsible for the obligation.

Formerly called education IRA. An education account that accumulates interest tax-free. You can also withdraw money from this account without penalty.)

Also known as a loan application, which is given to a potential borrower to provide details about his or her credit worthiness, which includes details about residence, employment, income, and existing debt. Sometimes, an application fee is charged to cover the cost of loan processing.

A credit card enables the account owner to conveniently make purchases electronically and be billed later. Most credit cards allow the balance to be carried over from one billing cycle to the next. However, the account owner will usually have to pay interest on that balance. The account owner will likely have to pay at least a certain amount of the balance due each billing cycle. Credit cards have a set credit limit that’s established when the account is opened, and may increase or decrease over time. The use of a credit card involves potential fees and penalties, depending on the cardholder’s payment history.

A written agreement, for a credit card account, that explains the

• terms and conditions of the account,
• credit usage and payment by the cardholder, and
• duties and responsibilities of the card issuer.

Any financial institution that issues debit or credit cards such as a credit union.

A type of insurance, also known as accident and health insurance, that makes payments on the loan if you become ill or injured and cannot work. Preexisting conditions may limit your ability to receive payments. CDI is optional coverage.

A record of an individual’s or company’s past borrowing and repaying behavior maintained by an independent credit reporting agency. It will list personal or corporate information, including how long your credit lines remained open, history of late and current payments, the original amount and the outstanding balance, monthly payments, charged-off accounts, delinquent accounts, and accounts charged-off in bankruptcy.

A type of life insurance that helps repay a loan if you should die before the loan is fully repaid. CLI is optional coverage.

The maximum amount of credit that is available on a credit card or other line of credit loan.

Generally, a person or organization that sells, provides, performs, or assists in improving a member's credit record, credit history, or credit rating (or says that that they will do so) in exchange for a fee or other payment. It also includes a person or organization providing advice or assistance about how to improve a member's credit record, credit history, or credit rating.

A detailed report of an individual's credit history prepared by a credit reporting agency and used by a financial institution in determining a loan applicant's creditworthiness.

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. The score of 800 is the best rating you can receive. Financial institutions may use a credit score to help determine whether you qualify for a particular credit card, loan, or service.

A not-for-profit financial institution owned by its members and represented by a volunteer board of directors who are elected by the membership. Credit Unions are formed by people who join together to form a common bond. To become a member, you must meet the credit union’s field of membership requirements and open a share account. Credit unions make money by loaning other members your savings. The members who borrow money from the credit union pay interest on their loan (like rent for using the money). The credit union then takes the interest from the loans and pays you a dividend on your share account.

Periodically the credit union provides a statement of a member's share account. It shows all deposits made, all checks paid, and other debits posted during the period (usually one month), as well as the current balance.

Common stipulation in a loan agreement whereby the collateral pledged for one loan is also used as collateral to secure a different loan with the same financial institution. This action gives the financial institution a legal right to seize any or all assets pledged by a borrower, even if only one loan goes into default.

A form of money, something (such as coins or bills) generally accepted as a way of measuring value, as a way to trade value, and as a way to pay for goods and services.

A program required to prevent financing of terrorist operations and money laundering. Banks and other financial institutions are required to adopt written procedures to ensure proper identification of customers. Financial institutions also must keep records of identifying information and check customer names against terrorist lists. This applies to anyone who opens a new account as well as existing account holders when the institution is unfamiliar with their identity.

A time of day established by a financial institution for receipt of deposits. After the cut-off time, deposits are posted to your account on the next banking day.

Computer crime, or cybercrime, refers to any crime that involves a computer and/or a network, where the computers may or may not have played an instrumental part in the commission of a crime.