Financial Glossary

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Financial TermDefinition
Account AgreementThe contract governing your open-end credit account. It provides information on changes that may occur to the account. 
Account HistoryThe payment history of an account over a specific period of time, including the number of times the account was past due or over the limit. 
Account HolderAny an all persons designated and authorized to transact business on behalf of an account. Each account holder's signature needs to be on file with the bank. The signature authorizes that person to conduct business on behalf of the account.
Accrued InterestInterest that has been earned but not yet paid. 
ACH: Automated Clearing HouseA computerized facility used by member depository institutions to electronically combine, sort, and distribute inter-bank credits and debits. ACHs process electronic transfers of government securities and provided customer services, such as direct deposit of customers' salaries and government benefit payments (i.e., social security, welfare, and veterans' entitlements), and preauthorized transfers.
AmortizationThe process of reducing debt through regular installment payments of principal and interest that will result in the payoff of a loan at its maturity.
Appraisal  The act of evaluating and setting the value of a specific piece of personal or real property.
APR: Annual Percentage RateThe cost of credit on a yearly basis, expressed as a percentage.
APY: Annual Percentage YieldA percentage rate reflecting the total amount of interest paid on a deposit account based on the interest rate and the frequency of compounding for a 365-day year.
ARM: Adjustable Rate MortgageAlso known as a variable-rate mortgage. The initial interest rate is usually below that of the conventional fixed-rate loans.  The interest may change over the life of the loan as market conditions change. 
ATM: Automated Teller MachineA machine, activated by a magnetically encoded card or other medium, that can process a variety of banking transactions. These include accepting deposits and loan payments, providing withdrawals, and transferring funds between accounts.
AuthorizationThe issuance of approval, by a credit card issuer, merchant, or other affiliate, to complete a credit card transaction.
Automatic Bill PaymentA checkless system for paying recurring bills with one authorization statement to a financial institution. For example, the customer would only have to provide one authorization form/letter/document to pay the cable bill each month. The necessary debits and credits are made through an Automated Clearing House (ACH).
Available BalanceThe balance of an account less any hold, uncollected funds, and restrictions against the account.
Available CreditThe difference between the credit limit assigned to a cardholder account and the present balance of the account. 
Balance TransferThe process of moving an outstanding balance from one credit card to another. This is usually done to obtain a lower interest rate on the outstanding balance. Transfers are sometimes subjected to a Balance Transfer Fee.
Bank StatementPeriodically the bank provides a statement of a customer's deposit 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.
Banking DayA business day during which an office of a bank is open to the public for substantially all of its banking functions.
BankruptA bankrupt person, firm, or corporation has insufficient assets to cover their debts. The debtor seeks relief through a court proceeding to work out a payment schedule or erase debts. In some cases, the debtor must surrender control of all assets to a court-appointed trustee.
BankruptcyThe legal proceedings by which the affairs of a bankrupt person are turned over to a trustee or receiver for administration under the bankruptcy laws. 1. Involuntary bankruptcy-one or more creditors of an insolvent debtor file a petition having the debtor declared bankrupt.
2. Voluntary bankruptcy-the debtor files a petition claiming inability to meet financial obligations and willingness to be declared bankrupt.
BeneficiaryA person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract.
Business DayAny day on which offices of a bank are open to the public for carrying on substantially all of the bank's business. 
Canceled CheckA check that a bank has paid, charged to the account holder's account, and then endorsed. Once canceled, a check is no longer negotiable.
Cash ConcentrationMoving funds from many accounts into one central account in order to improve the cash flow, reduce excess balances, and earn more interest.
Cash FlowThe amount of cash that a business has coming in and going out during a certain period. If the balance is lower at the end of the period, the cash flow is negative. If the closing balance is higher, cash flow is positive.
Cash ManagementIn the general sense, cash management is simply how a company controls the funds coming into and going out of the business. It can also refer to special services a bank might provide to a business customer.
Cashier's CheckA check drawn on the funds of the bank, 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.
Certificate of DepositCommonly known as a CD, an account into which you deposit a sum of money and agree to keep it there for a specified length of time. The account typically pays higher interest rate than standard savings and checking accounts. 
Charge-offThe balance on a credit obligation that a lender no longer expects to be repaid and writes off as bad debt.
CheckA written order instructing a financial institution to pay immediately on demand a specified amount of money from the check writer's account to the person named on the check or, if a specific person is not named, to whoever bears the check to the institution for payment.
Check 21 ActCheck 21 is a Federal law that is designed to enable banks to handle more checks electronically, 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. 
Check TruncationThe conversion of data on a check into an electronic image after a check enters the processing system. Check truncation eliminates the need to return canceled checks to customers.
Checking AccountA demand deposit account subject to withdrawal of funds by check or debit card.
Closed-end CreditGenerally, any credit sale agreement in which the amount advanced, plus any finance charges, is expected to be repaid in full by a specified date. Most real estate and automobile loans are closed-end agreements.
Closing CostsThe expenses incurred by sellers and buyers in transferring ownership in real property. The costs of closing may include the origination fee, discount points, attorneys' fees, loan fees, title search and insurance, survey charge, recordation fees, and the credit report charge.
CollateralAssets that are offered to secure a loan or other credit. For example, if you get a real estate mortgage, the bank's collateral is typically your house. Collateral becomes subject to seizure on default.
Collected FundsCash deposits or checks that have been presented for payment and for which payment has been received.
Collection AgencyA company hired by a creditor 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.
Collection ItemsItems-such as drafts, notes, and acceptances-received for collection and credited to a depositor's account after payment has been received. Collection items are usually subject to special instructions and may involve additional fees. Most banks impose a special fee, called a collection charge, for handling collection items.
ComakerA person who signs a note to guarantee a loan made to another person and is jointly liable with the maker for repayment of the loan. (Also known as a Cosigner.)
Community Reinvestment ActThe Act is intended to encourage depository institutions to help meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods. It was enacted by the Congress in 1977.  
Compound InterestInterest that applies to the original deposit as well as any newly earned interest. For example if you put $100 in an account that earns compound interest at 5% a year, in the next year you will earn 5% on $105. Noncompounding interest would continue to earn 5% on $100.
Consumer Reporting AgencyAn agency that regularly collects or evaluates individual consumer credit information or other information about consumers and sells consumer reports for a fee to creditors or others. Typical clients include banks, mortgage lenders, credit card companies, and other financing companies.
CosignerA person who signs a note to guarantee a loan made to another person and is jointly liable with the maker for repayment of the loan.
Credit ApplicationA form to be completed by an applicant for a credit account, giving sufficient details (residence, employment, income, and existing debt) to allow the seller to establish the applicant's creditworthiness. Sometimes, an application fee is charged to cover the cost of loan processing.
Credit BureauAn agency that collects individual credit information and sells it for a fee to creditors so they can make a decision on granting loans. Typical clients include banks, mortgage lenders, credit card companies, and other financing companies. Also commonly referred to as a consumer reporting agency or a credit reporting agency.
Credit LimitThe maximum amount of credit that is available on a credit card or other line of credit account.
Credit ReportA detailed report of an individual's credit history prepared by a credit bureau and used by a lender in determining a loan applicant's creditworthiness.
Credit ScoreA number, roughly between 300 and 800, that measures an individual's credit worthiness. The most well-known type of credit score is the FICO® score. This score represents the answer from a mathematical formula that assigns numerical values to various pieces of information in your credit report. Banks use a credit score to help determine whether you qualify for a particular credit card, loan, or service.
Cut-Off TimeA time of day established by a bank for receipt of deposits. After the cut-off time, deposits are considered received on the next banking day.
DebitA debit may be an account entry representing money you owe a lender or money that has been taken from your deposit account.
Debit CardA debit card allows the account owner to access their funds electronically. Debit cards may be used to obtain cash from automated teller machines or purchase goods or services using point-of-sale systems. The use of a debit card involves immediate debiting and crediting of consumers' accounts.
Debt-to-Income RatioThe percentage of a consumer's monthly gross income that goes toward paying debts. Generally, the higher the ratio, the higher the perceived risk. Loans with higher risk are generally priced at a higher interest rate.
DelinquencyA debt that was not paid when due.
Demand DepositA deposit of funds that can be withdrawn without any notice. 
Deposit SlipAn itemized memorandum of the cash and other funds that a customer presents to the bank for credit to his or her account.
Direct DepositA payment that is electronically deposited into an individual's account at a depository institution.
DisbursementThe paying of funds out of a bank account.
DisclosuresCertain information that Federal and State laws require creditors to give to borrowers relative to the terms of the credit extended.
EFT: Electronic Funds TransferThe transfer of money between accounts by consumer electronic systems-such as automated teller machines (ATMs) and electronic payment of bills-rather than by check or cash. (Wire transfers, checks, drafts, and paper instruments do not fall into this category.)  
Electronic Check ConversionElectronic check conversion is a process in which your check is used as a source of information-for the check number, your account number, and the number that identifies your financial institution. The information is then used to make a one-time electronic payment from your account-an electronic fund transfer.
EncodingThe process used to imprint or inscribe MICR characters on checks, deposits, and other financial instruments. [Magnetic Ink Character Recognition (MICR) is a character-recognition technology adopted mainly by the banking industry to facilitate the processing of checks. Each check in encoded at the bottom with the dollar amount of the check. If that information is entered incorrectly, there is an encoding error.]
Equal Credit Opportunity Act (ECOA)Prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status, age, or because an applicant receives income from a public assistance program. 
EscheatReversion of real or personal property to the State when 1) a person dies without leaving a will and has no heirs, or 2) when the property (such as a bank account) has been inactive for a certain period of time.
EscrowA financial instrument held by a third party on behalf of the other two parties in a transaction. The funds are held by the escrow service until it receives the appropriate written or oral instructions-or until obligations have been fulfilled. Securities, funds, and other assets can be held in escrow.
Estate AccountAn account held in the name of a decedent that is administered by an executor or administrator of the estate.
Exception HoldA period of time that allows the banks to exceed the maximum hold periods defined in the Expedited Funds Availability Act. 
Fair and Accurate Credit Transactions Act of 2003 (FACTA)The purpose of this Act is to help consumers protect their credit identities and recover from identity theft. One of the key provisions of this Act is that consumers can request and obtain a free credit report once every 12 months from each of the three nationwide consumer credit reporting companies (Equifax, Experian, and TransUnion)
Fair Credit Reporting Act (FCRA)A Federal law, established in 1971 and revised in 1997, that gives consumers the right to see their credit records and correct any mistakes. The FCRA regulates consumer credit reporting and related industries to ensure that consumer information is reported in an accurate, timely, and complete manner. The Act was amended to address the sharing of consumer information with affiliates.
Federal Deposit Insurance Corporation (FDIC)A government corporation that insures the deposits of all national and State banks that are members of the Federal Reserve System.
Federal Reserve SystemThe central bank of the United States. The Fed, as it is commonly called, regulates the U.S. monetary and financial system. The Federal Reserve System is composed of a central governmental agency in Washington, D.C. (the Board of Governors) and twelve regional Federal Reserve Banks in major cities throughout the United States.
FiduciaryUndertaking to act as executor, administrator, guardian, conservator, or trustee for a family trust, authorized trust, or testamentary trust, or receiver or trustee in bankruptcy.
Finance ChargeThe total cost of credit a customer must pay on a consumer loan, including interest. The Truth in Lending Act requires disclosure of the finance charge.
First MortgageA real estate loan which is in a first lien position, taking priority over all other liens. In case of a foreclosure, the first mortgage will be repaid before any other mortgages.
Fixed Rate LoanThe interest rate and the payment remain the same over the life of the loan. The consumer makes equal monthly payments of principal and interest until the debt is paid in full.
Fixed Rate MortgageA mortgage with payments that remain the same throughout the life of the loan because the interest rate and other terms are fixed and do not change.
Float1) The amount of uncollected funds represented by checks in the possession of one bank but drawn on other banks. 2) The time that elapses between the day a check is deposited and the day it is presented for payment to the financial institution on which it is drawn.
Flood InsuranceFlood insurance protects against water from an overflowing river or a hurricane's tidal surge and also covers damage from water that builds up during storms. 
ForeclosureA legal process in which property that is collateral or security for a loan may be sold to help repay the loan when the loan is in default.
Foreign Transaction FeeA fee assessed by your bank for making a transaction at another bank's ATM.
ForgeryThe fraudulent signing or alteration of another's name to an instrument such as a deed, mortgage, or check. The intent of the forgery is to deceive or defraud. 
Fraud AlertA key provision of the Fair and Accurate Credit Transactions Act of 2003 is the consumer's ability to place a fraud alert on their credit record. A consumer would use this option if they believe they were a victim of identity theft. The alert requires any creditor that is asked to extend credit to contact the consumer by phone and verify that the credit application was not made by an identity thief. 
GarnishmentA legal process that allows a creditor to remove funds from your bank account to satisfy a debt that you have not paid. If you owe money to a person or company, they can obtain a court order directing your bank to take money out of your account to pay off your debt.
GuarantorA party who agrees to be responsible for the payment of another party's debts should that party default.
Home Equity Line of Credit (HELOC)A line of credit secured by the equity in a consumer's home. It can be used for home improvements, debt consolidation, and other major purchases. Interest paid on the loan is generally tax deductible (consult a tax advisor to be sure). The funds may be accessed by writing checks against the line of credit or by getting a cash advance.
HoldUsed to indicate that a certain amount of a customer's balance may not be withdrawn until an item has been collected, or until a specific check or debit is posted.
Home Equity LoanA home equity loan allows you to tap into your home's built-up equity, which is the difference between the amount that your home could be sold for and the amount that you still owe. Homeowners often use a home-equity loan for home improvements, to pay for a new car, or to finance their child's college education. The interest paid is usually tax-deductible. Because the loan is secured by your home's equity, if you default, the bank may foreclose on your house and take ownership of it. This type of loan is sometimes referred to as a second mortgage or borrowing against your home.
Individual AccountAn account in the name of one individual. 
Insufficient FundsWhen a depositor's checking account balance is inadequate to pay a check presented for payment.
InterestThe term interest issued to describe the cost of using money, a right, share, or title in property.
Interest RateThe amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures.
Individual Retirement Account (IRA)A retirement savings program for individuals to which yearly tax-deductible contributions up to a specified limit can be made. The amount contributed is not taxed until withdrawn. Withdrawal is not permitted without penalty until the individual reaches age 59 1/2.
Joint AccountAn account owned by two or more persons. Either party can conduct transactions separately or together as set forth in the deposit account contract.
Late ChargeThe fee charged for delinquent payment on an installment loan, usually expressed as a percentage of the loan balance or payment. Also, a penalty imposed by a card issuer against a cardholder's account for failing to make minimum payments.
LeaseA contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). 
LenderAn individual or financial institution that lends money with the expectation that the money will be returned with interest.
LienLegal claim against a property. Once the property is sold, the lien holder is then paid the amount that is owed.
Line of CreditA pre-approved loan authorization with a specific borrowing limit based on creditworthiness. A line of credit allows borrowers to obtain a number of loans without re-applying each time as long as the total of borrowed funds does not exceed the credit limit.
Loan-to-Value RatioThe ratio of the loan principal (amount borrowed) to the appraised value (selling price). For example, on a $100,000 home, with a mortgage loan principal of $80,000, the loan-to-value ratio is 80 percent. The LTV will affect programs available to the borrower; generally, the lower the LTV, the more favorable the program terms offered by lenders.
Loan ProceedsThe net amount of funds that a lending institution disburses under the terms of a loan, and which the borrower then owes.
Local CheckA check payable by, at, or through a bank in the same check processing region as the location of the branch of the depository bank. The depository bank is the bank into which the check was deposited. As of February 27, 2010, the Federal Reserve consolidated its checking processing centers into one processing center. Therefore, all checks are now considered local. See also Funds Availability.
MaturityThe date on which the principal balance of a loan, bond, or other financial instrument becomes due and payable.
Minimum BalanceThe amount of money required to be on deposit in an account to qualify the depositor for special services or to waive a service charge. See also Minimum Balance.
Minimum PaymentThe minimum dollar amount that must be paid each month on a loan, line of credit, or other debt. 
Money Market Deposit AccountA savings account that offers a higher rate of interest in exchange for larger than normal deposits. Insured by the FDIC, these accounts have limits on the number of transactions allowed and may require higher balances to receive the higher rate of interest.
MortgageA debt instrument used in a real estate transaction where the property is the collateral for the loan. A mortgage gives the lender a right to take possession of the property if the borrower fails to pay off the loan.
Mortgage LoanA loan made by a lender to a borrower for the financing of real property.
MortgageeThe lender in a mortgage loan relationship. 
MortgagorThe borrower in a mortgage loan relationship.
National BankA bank that is subject to the supervision of the Comptroller of the Currency. The Office of the Comptroller of the Currency is a bureau of the U.S. Treasury Department. A national bank can be recognized because it must have "national" or "national association" in its name. 
Negotiable Order of Withdrawal Account (NOW)A savings account from which withdrawals can be made by negotiable orders of withdrawal (functional equivalent of checks). This is an interest-bearing account for which the bank must reserve the right to require the depositor to provide at least seven days notice of his/her intent to withdraw funds. See also NOW Account.
Official CheckA check drawn on a bank and signed by an authorized bank official. (Also known as a cashier's check.)
OffsetBanks' legal right to seize funds that a guarantor or debtor may have on deposit to cover a loan in default. It is also known as right of setoff  
Online BankingA service that allows an account holder to obtain account information and manage certain banking transactions through a personal computer via the financial institution's web site on the Internet. (This is also known as Internet or electronic banking.)
Open-End CreditA credit agreement (typically a credit card) that allows a customer to borrow against a preapproved credit line when purchasing goods and services. The borrower is only billed for the amount that is actually borrowed plus any interest due. (Also called a charge account or revolving credit.) 
Outstanding CheckA check written by a depositor that has not yet been presented for payment to or paid by the depositor's bank.
OverdraftWhen the amount of money withdrawn from a bank account is greater than the amount actually available in the account, the excess is known as an overdraft, and the account is said to be overdrawn. 
OverdrawTo write a check for an amount that exceeds the amount on deposit in the account.
OverlimitAn open-end credit account in which the assigned dollar limit has been exceeded.
PayeeThe person or organization to whom a check, draft, or note is made payable. 
Paying (Payor) BankA bank upon which a check is drawn and that pays a check or other draft. 
Payment Due DateThe date on which a loan or installment payment is due. It is set by a financial institution. Any payment received after this date is considered late; fees and penalties can be assessed. 
PayoffThe complete repayment of a loan, including principal, interest, and any other amounts due. Payoff occurs either over the full term of the loan or through prepayments.
PayorThe person or organization who pays.
Periodic RateThe interest rate described in relation to a specific amount of time. The monthly periodic rate, for example, is the cost of credit per month; the daily periodic rate is the cost of credit per day.
Periodic StatementThe billing summary produced and mailed at specified intervals, usually monthly.
Personal Identification Number (PIN)Generally a four-character number or word, the PIN is the secret code given to credit or debit cardholders enabling them to access their accounts. The code is either randomly assigned by the bank or selected by the customer. It is intended to prevent unauthorized use of the card while accessing a financial service terminal.
PhishingThe activity of defrauding an online account holder of financial information by posing as a legitimate entity.  
Point of Sale (POS)The location at which a transaction takes place. 2) Systems that allow bank customers to effect transfers of funds from their deposit accounts and other financial transactions at retail establishments.
Positive PayA fraud prevention tool that helps compare checks issued vs. checks presented for payment in order to identify possible tampering.
Power of AttorneyA written instrument which authorizes one person to act as another's agent or attorney. The power of attorney may be for a definite, specific act, or it may be general in nature. The terms of the written power of attorney may specify when it will expire. If not, the power of attorney usually expires when the person granting it dies. Some institutions require that you use the bank's power of attorney forms. (The bank may refer to this as a Durable Power of Attorney: The principal grants specific rights to the agent).
Preauthorized Electronic Fund TransfersAn EFT authorized in advance to recur at substantially regular intervals.
Pre-Authorized DebitsAutomatic debits established to make payments at pre-scheduled, specific times.
Preauthorized PaymentA system established by a written agreement under which a financial institution is authorized by the customer to debit the customer's account in order to pay bills or make loan payments.
Principal BalanceThe outstanding balance on a loan, excluding interest and fees.
Private Mortgage Insurance (PMI)Insurance offered by a private insurance company that protects the bank against loss on a defaulted mortgage up to the limit of the policy (usually 20 to 25 percent of the loan amount). PMI is usually limited to loans with a high loan-to-value (LTV) ratio. The borrower pays the premium.
Real Estate Settlement Procedures Act (RESPA)Federal law that, among other things, requires lenders to provide "good faith" estimates of settlement costs and make other disclosures regarding the mortgage loan. RESPA also limits the amount of funds held in escrow for real estate taxes and insurance. 
RefinancingA way of obtaining a better interest rate, lower monthly payments, or borrow cash on the equity in a property that has built up on a loan. A second loan is taken out to pay off the first, higher-rate loan.
RefundAn amount paid back because of an overpayment or because of the return of an item previously sold. 
Release of LienTo free a piece of real estate from a mortgage.
Remote DepositDepositing checks without having to visit a branch or ATM. Users scan checks and submit the images electronically.
RenewalA form of extending an unpaid loan in which the borrower's remaining unpaid loan balance is carried over (renewed) into a new loan at the beginning of the next financing period.
Residual Interestinterest that continues to accrue on your credit card balance from the statement cycle date until the bank receives your payment. For example, if your statement cycle date was January 10 and the bank received your payment on January 20, there were ten days for which interest accrued. This amount will be posted on your next statement.
Return ItemA negotiable instrument—principally a check—that has been sent to one bank for collection and payment and is returned unpaid by the sending bank.
Reverse MortgageA reverse mortgage is a special home loan product that allows a homeowner aged 62 or older the ability to access the equity that has accumulated in their home. The home itself will be the source of repayment. The loan is underwritten based on the value of the collateral (home) and the life expectancy of the borrower. The loan must be repaid when you die, sell your home, or no longer live there as your principal residence.
Revolving CreditA credit agreement (typically a credit card) that allows a customer to borrow against a preapproved credit line when purchasing goods and services. The borrower is only billed for the amount that is actually borrowed plus any interest due. (Also called a charge account or open-end credit.)
Right of OffsetBanks' legal right to seize funds that a guarantor or debtor may have on deposit to cover a loan in default. It is also known as the right of set-off.
Right of RescissionRight to cancel, within three business days, a contract that uses the home of a person as collateral, except in the case of a first mortgage loan. There is no fee to the borrower, who receives a full refund of all fees paid. The right of rescission is guaranteed by the Truth in Lending Act (TILA).
Safe Deposit BoxA type of safe usually located in groups inside a bank vault and rented to customers for their use in storing valuable items. 
SafekeepingA service provided by banks where securities and valuables are protected in the vaults of the bank for customers. 
Satisfaction of MortgageA document issued by a mortgagee (the lender) when a mortgage is paid in full.
Service ChargeA charge assessed by a depository institution for processing transactions and maintaining accounts. 
Signature CardA card signed by each depositor and customer of a bank which may be used as a means of identification. The signature card represents a contract between the bank and the depositor.
Stale-Dated CheckPresented to the paying bank 180 days (6 months) or more after the original issue date. Banks are not required by the Uniform Commercial Code to honor stale-dated checks and can return them to the issuing bank unpaid. The maker of a check can discourage late presentment by writing the words "not good after X days" on the back of the check.
StatementA summary of all transactions that occurred over the preceding month and could be associated with a deposit account or a credit card account.
Stop PaymentAn order not to pay a check that has been issued but not yet cashed. If requested soon enough, the check will not be debited from the payer's account. Most banks charge a fee for this service.
Student LoanLoans made, insured, or guaranteed under any program authorized by the Higher Education Act. Loan funds are used by the borrower for education purposes.
Substitute CheckA substitute check is a paper copy of the front and back of the original check. A substitute check is slightly larger than a standard personal check so that it can contain a picture of your original check. A substitute check is legally the same as the original check if it accurately represents the information on the original check and includes the following statement: "This is a legal copy of your check. You can use it the same way you would use the original check." The substitute check must also have been handled by a bank. Substitute checks were created under Check 21, the Check Clearing for the 21st Century Act, which became effective on October 28, 2004.
Sweep AccountAn account that automatically redistributes money into another account when a certain threshold is reached. An example would be checking account that moves funds over a certain dollar amount into a higher-interest account. Sweep accounts reduce the amount of manual transactions needed.
TermsThe period of time and the interest rate arranged between creditor and debtor to repay a loan.
Time DepositA time deposit (also known as a term deposit) is a money deposit at a bank that cannot be withdrawn for a certain "term" or period of time. When the term is over it can be withdrawn, or it can be held for another term. The longer the term, the better the yield on the money. Generally, there are significant penalties for early withdrawal. 
Trust AccountA general term that covers all types of accounts in a trust department, such as estates, guardianships, and agencies. 
Trust AdministratorA person or institution that manages trust accounts. 
Truth in Lending Act (TILA)The Truth in Lending Act is a Federal law that requires lenders to provide standardized information so that borrowers can compare loan terms. In general, lenders must provide information on
-  what credit will cost the borrowers
-  when charges will be imposed, and
-  what the borrower's rights are as a consumer.
Uncollected FundsA portion of a deposit balance that has not yet been collected by the depository bank.
Uniform Commercial Code (UCC)A set of statutes enacted by the various States to provide consistency among the States' commercial laws. It includes negotiable instruments, sales, stock transfers, trust and warehouse receipts, and bills of lading.
Uniform Gifts to Minors ActUGMA provides a child under the age of 18 (a minor) with a way to own investments. The money is in the minor's name, but the custodian (usually the parent) has the responsibility to handle the money in a prudent manner for the minor's benefit. The parent cannot withdraw the money to use for his or her own needs. 
Usury RatesThe maximum rate of interest lenders may charge borrowers. The usury rate is generally set by State law.
Variable RateAny interest rate or dividend that changes on a periodic basis.
Wire TransferA transfer of funds from one point to another by wire or network such the Federal Reserve Wire Network (also known as FedWire).
Zero Balance AccountAt the end of the day, these accounts wind up with a balance of zero dollars. They maintain only enough funds to cover the day’s checks or pay down credit balances. Used by businesses to eliminate excess balances and maximize investments.