Commonly Used Terms


ABA  Routing Number – American Bank Association nine digit number assigned to identify individual financial institution. Parsons FCU’s ABA #322284698

ACH – Automated Clearing House. An association of financial institutions that provide nationwide electronic payment and collection

Accrued Interest – The interest earned on a loan for the period of time that has elapsed since interest was last paid.

AD&D – Accidental Death and Dismemberment

Adj. – Adjustment

Amortization – The gradual reduction of a debt as payments are applied to principle and interest at a rate that pays the loan in full at the end of the loan term.

Appraisal – market evaluation of house, car, boat or any collateral used as security for a loan

APR – Annual Percentage Rate. A rate that represents the true cost of a debt due to fees necessary to the loan or the relationship of the total finance charge to the amount of the loan.

APY – Annual Percentage Yield. Actual interest received due to compounding of interest on a saving account.

ATM – Automated Teller Machine

Beneficiary – A person named to receive funds on an account after the death of a primary account holder.

BSA – Bank Secrecy Act

Compound – Interest calculation when interest is paid on interest

Community Property – In some states (California, Nevada, Louisiana, Wisconsin, Texas, Arizona, Washington, Idaho and New Mexico) a form of ownership under which property acquired during a marriage is presumed to be owned jointly unless acquired in such manner as to legally be considered as separate property of either spouse.

Co-signer   – A persons who signs a legal instrument and therefore becomes individually and jointly liabel for repayment or performance of an obligation.

Credit Union – Member owned co-operative financial institution

CTR – Currency Transaction report

Debit Card – A plastic card used to access a share draft account

Depreciation – The reduction of value of an asset attributed to normal wear and tear of that asset

Dividends – Interest paid on share accounts

Dormant Account – Account with no activity for 12 consecutive months

Draft – Share draft or check

ECOA – Equal Credit Opportunity Act. ECOA is a federal law that requires lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs. Also know as Regulation ‘B’

EFT – Electronic Funds Transfer

Electronic Services – All services used via electronic access, such as home banking, mobile banking, payroll transfers, eDeposit,  ATM and debit card transactions and bill payment.

Equity – In real estate, equity is the difference between fair market value and current indebtedness, usually referring to the owner’s interest.

Escheat – The act of sending abandoned or dormant funds to the state controller after three years of inactivity and no correspondence from the member.

Escrow – A transaction in which a third party, acting as the agent for the buyer, and the seller, carries out instruction of both and assumes the responsibilities of handling all the paperwork and disbursement of funds.

Executor – A person named in a will to administer an estate.  The court will appoint an administrator if no executor is named.  Executrix is the feminine form.

First Mortgage – A mortgage having priority over all other voluntary liens against certain property

Foreclosure – An authorized action taken by a mortgagee or lender to recover a debt made by the mortgagor or borrower under the terms of a mortgage or deed of trust for the purpose of having the property sold and the proceeds applied to the payment of a defaulted debt.

Funds Availability Act – A federal law that dictates the holding and releasing of deposited funds also know as Reg. CC.

Garnishment – A legal proceeding by which a debtor’s property, money, or credits are given to a creditor in satisfaction of a debt owed by the debtor to the creditor.

Good Faith Estimate – A document given to a borrower when using real property as collateral to estimate and describe potential fees and costs required for the loan.

Grace Period – A period of time granted without penalty that can apply to Visa account payments or renewing certificates of deposit.

Grant Deed – A legal document filed to change ownership of real property.

Guarantor – A person who agrees to pay a debit if the person who is primarily liable for the debt fails to pay the debt.

Index – In variable rate loans the interest rate stated by a recognized financial institution that is used as a base, along with a margin to determine an interest rate to be charged for the loan. Example: 11th District Source of Funds or Prime Rate.

Joint Tenancy – A type of undivided ownership interest in the whole of property, with right of survivorship.

Judgment Lien – A lien that is created on the property of a debtor as a result of the creditor receiving a judgment.  A judgment lien may be discharged in bankruptcy.

Junior Mortgage – A mortgage that is second to another mortgage on the same property.

Lien – A claim placed on property to satisfy a debt.  A lien can be consensual or as a result of a court action.

Margin – The number of basis points a lender adds to an index to determine the interest rate of an adjustable rate mortgage.

MICR Line – Magnetic Ink Character Recognition Line. Found on the bottom of paper checks to denote the financial institution and individual account on which the check is drawn.

Mortgage – A conveyance of an interest in real property given as security for the payment of a debt.

MSRP – Manufacturer’s Suggested Retail Price

NAFCU – National Association of Federal Credit Unions. A trade association for federally chartered credit unions.

NCUSIF – National Credit Union Share Insurance Fund. The main source of share insurance for credit unions, administered by NCUA. Coverage protects member’s savings from loss if the credit union becomes insolvent.

NCUA – National Credit Union Administration. Regulator and examiner of federal credit unions

Net Income – The difference between effective gross income and all expenses including taxes and insurance.

NSF – Non Sufficient Funds. Usually applies to a check which is returned to the depositor because there is insufficient funds in an account to clear the item.

Open-End Credit – Credit extended under a plan in which the borrower reasonably contemplates repeated or ‘revolving’ transactions. The creditor may impose a finance charge on an outstanding unpaid balance. The amount of credit extended to the consumer during the term of the plan is generally made available to the extent that any outstanding balance is repaid up to any limit set by the creditor.

POA – Power of Attorney. A legal instrument granting certain rights to one to act as the attorney or agent of the grantor on their behalf.

POD – Payable On Death.

Point – An amount equal to one percent of the principal amount of a real estate loan. Borrowers have the choice to pay ‘points’ at the beginning of a loan and obtain a lower interest rate.

POS - Point of Sale

Preauthorized Drafts – Checks generated by a third-party company and drawn on the financial institution where a member has his or her checking account. These checks are not signed by the member, but the member gives oral or written consent to the creation of the check.

Quitclaim Deed – A deed that transfers only such interest, title, or right a grantor may have at the time the conveyance is executed.

Reaffirmation – A voluntary agreement in bankruptcy whereby the debtor agrees to continue to pay a debt that can be discharged.

Settlement – An agreement between the creditor and the debtor whereby the debt will be forgiven by the creditor in return for a payment less than the full amount currently owed. The amount of the forgiven debt can become a tax liability.

Simple Interest – A method of calculating interest on a loan in which the amount of the interest is computed on the outstanding principal balance of a loan for each given period or from the last payment.

Tenancy in Common – In law, the type of tenancy or estate created when real or personal property is granted, devised, or bequeathed to two or more persons, in the absence of expressed words creating a joint tenancy. There is no right of survivorship.

Title Insurance Policy – A contract by which the insurer, usually a title insurance company, agrees to pay the insured a specified amount for any loss caused by defects of title to real estate, wherein the insured has an interest as purchaser, mortgagee, or otherwise.

Trust Deed – The instrument given by a borrower (trustor) to a lender (trustee), vesting title to a property as security for the borrower’s fulfillment of an obligation.

Trustee – One who holds title to a real property under the terms of a deed of trust.

Truth-in-Lending Act – Federal Reserve Board Regulation Z, that gives all consumers the right to understand what the true cost of credit is.

UCC – Uniform Commercial Code. A series of laws adopted by all states that govern the terms of commercial transactions.