Amazing Kids! Magazine

Word Booster – Money Terms

By Ryan Traynor, Editor-in-Chief

 

Money can be difficult to understand because there are special terms used in the financial industry that are for specific things. For our “Money, Money, Money” issue, here is a list of money terms that will help you survive when dealing with financial matters.

Annual Fee: The fee a credit card company charges a credit card holder to use the card for a year. It can also mean the fee a lender charges a borrower for the use of a line of credit for a year.

Dictatorship: a ruler or small clique wields absolute power.

Annual Percentage Rate (APR): A measurement used to compare different loans. The APR describes the total cost of credit by calculating the loan’s interest rate, term, and fees to express the cost as a yearly rate. The lower the APR, the lower the total cost of credit.

Appreciation: The gain over time of the value of an item such as a car, home, or stock, over its original purchase price.

Asset:  Anything of value owned by a person or company such as cash, a house, car, stocks, and equipment.

Automated Teller Machine (ATM):  A machine used by customers that has a computer inside that helps bank customers get information on their account, get cash, make deposits, or transfer money between accounts.

Bank: A financial institution that handles money. This includes keeping it for saving, exchanging, investing, and lending.

Capital: The assets a person owns such as a car, cash, and a home, minus the amount owed on these assets.

Check: A written order instructing a bank to pay a specific amount of money to a specific person, company, or organization.

Credit: When a bank, business, or person allows someone to purchase goods or services on the promise of future payment.

Credit Bureau: A company that gathers information on consumers who use credit. These companies send this information to lenders and other businesses to help them evaluate whether or not to give customers credit.

Credit History: A written record of a person’s use of credit, including applying for credit, employment history, using credit to make purchases, and the record of the timeliness of the payments on that credit.

Credit Union: A non-profit financial institution that is owned and operated by its members. They provide financial services such as savings and lending. To join the credit union, a person must belong to a specific group such as a college alumni association, labor union, or type of employment (teachers).

Debit Card: A card linked to a checking account that can be used to withdraw money and make deposits at an AM or to make purchases at stores.

Debt: Money, goods, or services a person or company owes to others.

Endorse: Signing the back of a check to authorize the bank to exchange the check for cash or credit.

Inflation: An increase in the general price level of goods and services which results in a decrease in the purchasing power of the dollar.

Interest: The amount of money paid by a borrower to a lender in exchange for the use of their money for a period of time.

Late Fees: The charge or fee that is added to a loan or credit card payment when the payment is not paid by the due date.

Liability: The amount of money an individual or business owes to someone else which is also known as debt.

Principal: The total amount of money borrowed, loaned, invested not including interest or service charges.

Savings and Loan: A financial institution that accepts deposits, makes home loans, and pays dividends to mostly individuals.

Wage: The total amount received in exchange for work. This amount will include any hourly wages, salary, commission, and tips.

There are many money terms to learn and understand. Keep reading our new Money Smarts column each month to learn even more helpful hints to becoming financially secure in the future.