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Banking terms
terms taught in Life Changing Women
| Term | Definition |
|---|---|
| 401(k) PLan | A flexible retirement plan for business with employees. Investors in the plan don't have to pay taxes on the income they invest until they withdraw the funds at retirement age |
| 529 Plan | A program set up to allow an adult to either prepay, or contribute to an account established for paying a student's qualified education expenses at an eligible educational institution |
| Account | A banking service allowing a customer's money to be handled and tracked. Common bank accounts are savings and checking accounts. |
| Adjustable-rate mortgage(ARM) | A loan that allows the lender to make changes in the interest rate, and resulting principal and interest payments charged to the borrower. These rate changes are usually tied to the rise and fall of a financial statistic (called an index), such as the |
| Adjustable-rate mortgage(ARM) cont. | prime rate or Treasury Bill rate. The initial interest rates on ARMs are lower than rates on fixed-rate mortgages, as the borrower is taking the risk of the interest rate rising over time. |
| Adjustable-rate mortgage(ARM) cont.2 | The borrower is protected by a maximum interest rate, which the lender may reset annually. There may be a limit on the number and amount of increases or decreases to the interest rate at each change date or over the life of the loan. |
| Annual fee | The fee a credit card company charges a credit card holder to use the card for a year. Or, the fee a lender charges a borrower for the use of a line of credit for a year. |
| Annual percentage rate(APR) | A measurement used to compare different loans, the APR takes into account a loan's interest rate, term, and fees to illustrate the total cost of credit expressed as a yearly rate. The lower the APR, the lower the total cost of the loan. |
| Annual percentage yield(APY) | The rate of return on an investment, such as a deposit in an interest-bearing savings account, for a one year period. |
| Appraisal | A professional estimate of a property's market value |
| Appreciate (in value) | See Appreciation |
| Appreciation | The amount of value |
| Asset | Anything of value owned by a person or company. For example, a person's assets might include cash, a house, a car, and stocks. A business's assets might include cash, equipment, and inventory. |
| Asset allocation | The division of an investment portfolio across various types of securities, such as mutual funds, stocks and bonds, in an effort to help reduce risks. |
| Assets | Anything of value owned by a person or company. |
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