ABOUT US > glossary of banking terms
a-b   c   d   e-h   i-l    m-o    p-s    t-z


TERMS DEFINITIONS
A-B  
Account Money deposited with a financial institution.
Account number The unique number assigned by a financial institution to identify your deposit or credit account.
Amortization The repayment of debt by installments over a period of time.
Annual Fees A yearly fee charged by credit grantors for the privilege of using a credit card or service.
Annual percentage rate (APR) A measure of how much interest credit will cost you, expressed as an annual percentage.
Applicant A person applying for credit privileges, employment or some other benefit.
Asset Anything you own that has value or use.
ATM or ABM Automated Teller Machine or Automated Banking Machine
Budget A financial plan for saving and spending money.
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C  
Cheque A written document instructing a bank to pay money from an account.
Cleared Cheque A cheque that is debited from the writer's account and deposited to the payee's account.
Co signer Person who pledges in writing as part of a credit contract to repay the debt if the borrower fails to do so. The account displays on both the borrower's and the co-signer's credit reports.
Collateral Property acceptable as security for a loan or other obligation.
Collection A creditor's attempt to recover a past-due payment that can involve turning the account over to a collection department or company. Having a debt in collection is a serious negative item on a credit report.
Compounding Interest calculated on the principal and accumulated interest.
Consolidation Loan A loan usually obtained for the purpose of reducing the amount of the payments of bills owing by consolidating the bills into one loan payment. The consumer pays off several bills with the proceeds from one loan and is left with one monthly payment.
Consumer Person who uses and/or buys goods and services for family or personal use.
Co-operative A democratic institution owned and controlled by its members that provides a unified voice and structure to a group of individuals who have pooled their resources to achieve common goals.
Credit A trust or a promise to pay later for goods or services purchased today.
Credit bureau A credit-reporting agency for information on the credit rating of individuals or firms. The largest credit bureau in Canada is Equifax.
Credit History Record of how a consumer has paid credit accounts in the past. Used as a guide to determine whether the consumer is likely to pay accounts on time in the future.
Credit Limit The maximum amount of money you can charge on a particular credit account.
Credit report A document containing financial information about a person, focusing on his or her history of paying obligations, such as a mortgage, car payment, utilities, and credit cards. Also includes current balances on outstanding debts, the individual's amount of available credit, public records such as bankruptcies, and inquiries about credit from various companies.
Credit risk The measure of a person's creditworthiness. People who are more likely to repay their debts on time are considered a better risk by lenders, and will generally be charged lower interest rates for borrowing money.
Credit Union A financial co-operative organized by a group of people who have a community bond. It operates primarily by accepting deposits from members, making loans to members and providing a variety of other financial services.
Creditworthiness The ability of a consumer to receive favourable consideration and approval for the use of credit.
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D  
Debit Withdrawal of funds from an account.
Debit Card Purchases are deducted electronically directly from the consumer's personal chequing or savings account at the point of sale.
Debt-to-available-credit ratio The amount of money a person has in outstanding debt compared to the amount of credit available on all of the individual's credit cards and credit lines. The higher a person's debt to available credit, the more risky the individual appears to potential lenders.
Default A designation on a credit report that indicates a person has not paid a debt that was owed. Accounts usually are listed as being in default after several reports of delinquency. Defaults are a serious negative item on a credit report.
Delinquent A designation on a credit report that a person hasn't made the minimum payment on a loan or a credit card on time. On credit reports, delinquencies are usually shown as being 30, 60, 90 or 120 days delinquent. Delinquencies are a serious negative item on a credit report.
Deposit Money placed in an active account with a financial institution through a Teller, ABM, Automated Deposit or Envelope Depository.
Deposit Insurance Insurance available to depositors in the event of the failure of a financial institution.
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E-H  
Endorse Sign the back of a cheque made out to you.
Equifax One of the two major credit reporting agencies in Canada.
Finance Charge Amount of interest. Finance charges are usually included in the monthly payment total.
Fixed Rate An annual percentage rate that does not change.
Garnishee Legal process wherein a creditor has obtained a judgment on a debt and may obtain full or partial payment by seizure of a portion of a debtor's assets (wages, bank account, etc.).
Grace period The time period you have to pay a bill in full and avoid interest charges.
Guarantor Person responsible for paying a debt if a borrower defaults on payments.
Home Equity Loan A loan using your residence as security based on the difference between the amount you owe on your home, and the home's current market value.
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I-L  
Installment Loan A type of credit in which the monthly payment is the same every month and the loan has a set time period. The most common forms of installment loans are mortgages and car loans.
Interest The cost of borrowing, usually a percentage of the amount borrowed or loaned.
Lease A written document containing the conditions under which the possession and use of real and/or personal property are given by the owner to another for a stated period and for a stated consideration.
Liability amount Amount for which you are legally obligated.
Lien A legal claim placed on a person's property, such as a car or a house, as security for a debt. A lien is often given as a security for the payment of a debt. A lien on real estate can be placed against a consumer for failure to pay taxes,  or by a contractor who did work on the house and didn't get paid. A lien on a vehicle can be placed by a mechanic who repaired a car and didn't get paid. The property cannot be sold without paying the lien.
Line of Credit In revolving credit, an amount a borrower can draw upon up to a maximum that an account can show as outstanding.
Loan Money lent on a temporary basis with interest charged for its use.
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M-O  
Maturity The date when an investment product is due.
Mortgage A lien or claim against an asset given by the buyer to the lender as security for money borrowed.
1st Mortgage Also known as the "primary" mortgage-has priority over the claims of subsequent lenders for the same property.
2nd Mortgage Also know as the "secondary" mortgage-is a loan secured by a mortgage  which is behind another mortgage.
Mutual Fund An investment product in which one's money is pooled with that of other investors. A portfolio manager uses the pooled money to buy a portfolio of investments that are managed on an ongoing basis. Mutual Funds fluctuate and do not provide a guaranteed return.
NSF Cheque A cheque an institution has refused to cash because there are no funds to cover it.
Overdrawn Money accessed from an account when there are not enough funds available on deposit.
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P-S  
Personal Loan A loan based on your income, debt level and credit history.
Principal The outstanding balance of a loan exclusive of interest and other charges.
Repossession Forced or voluntary surrender of assets as a result of the customer's failure to pay as promised. There are several types and descriptions of repossession actions.
Revolving credit A revolving account, up to a maximum limit, that requires a minimum payment each month on the remaining balance. As the balance declines, so does the service charge.
RRSP A registered savings plan for which contributions are tax deductible and in which income earned is tax sheltered until withdrawn.
Security Real or personal property that a borrower pledges for the term of a loan. Should the borrower fail to repay, the creditor may take ownership of the property by following legally mandated procedures.
Service Fees The monthly fees charged for the operation of an account.
Skim or Skimming This is something that a fraudster does. When you aren’t aware, the fraudster copies the magnetic stripe on the back of your card and then creates a new card with that magnetic stripe. To prevent this, watch where your debit or credit card goes, protect your PIN, and NEVER TELL anyone your PIN.
Stop Payment A request made to a bank to not pay a specific cheque.
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T-Z  
Teller A person in a financial institution branch with whom you carry out transactions such as deposits and withdrawals.
Term Deposit Money deposited for a fixed period of time.
Terms This refers to the debt repayment terms of your agreement with a creditor, such as 60 months, 48 months, etc.
Third-Party Collectors Collectors who are under contract to collect debts for a credit department, financial institution or credit company; collection agency.
Transaction fees Fees charged for certain transactions – for example, to write cheques which are processed through an account.
Transfers Movement of money from one account or another.
Unsecured Credit Credit for which no collateral has been pledged. Loans made under this arrangement are sometimes called signature loans; in other words, a loan is granted based only on the customer's promise to pay.
Variable Rate An annual percentage rate that may change over time as the prime lending rate varies or according to your contract with the lender.
Withdrawals Money drawn from an active account.
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