Glossary of Terms
Sylvania's Own Community Credit Union
Not Familiar With Credit Union Lingo?
Annual Percentage Yield (APY)- Percentage rate that reflects the total amount of dividends paid on a share account based on the dividend rate and the frequency of compounding for a 365-day period and calculated according to rules set out in the TISA.
ATM-Stand-alone computer terminal that allows members to directly make transactions on their accounts by using an access device such as a plastic card similar in appearance to a credit card.
Automatic Debt Repayments-The credit union deducts a set amount and applies it to current loan. Payments are made the same time every month and on time. This can help boost a members’ credit score.
Collateral- a security or guarantee (usually an asset) pledged for the repayment of a loan if one cannot procure enough funds to repay.
Credit Union-Financial cooperative organized and controlled by individuals or groups that have a common bond; such as a Community. Credit union members become owners and shareholders of the credit union when they join. Members pool their assets, providing funds for loans and other financial services to those in need within the group.
Credit Score-The major credit bureaus, Trans Union, Equifax, and Experian rate each borrower with a score based on personal use of credit. Criteria includes, timely payments, charged off loans, legal suits, maximum amounts on credit lines, how many credit cards an individual has, interest rate you are currently paying, bankruptcy, etc.
CU@Home-This is an Internet based financial service offered to members of the credit union. This service is available 24 hours a day, seven days a week, providing credit union members with the flexibility to take care of many of their financial transactions without requiring them to visit the credit union
Debit Card-Card similar in appearance to and ATM / Credit card. This card expands the member’s ability to make electronic transactions at other locations, such as retail stores, gas stations, and supermarket chains instead of writing a check.
Debt-to-Income Ratio-Ratio calculated by dividing the member’s total monthly income into his or her total monthly debt payments( including the payment on the loan for which he or she is applying, but not including monthly housing payment); important factor when determining capacity.
Direct Deposit-Is when a members paycheck, social security, Public Employees Retirement System , strs or any kind of retirement check it electronically deposited into their account.
Dividends- Interest paid on shares. Rates are set by the credit union’s board of directors and may not exceed credit union earnings.
Dividend Rate-Annual percentage that will be applied to the share account principal to calculate the dividend (not including compounding).
Early Withdrawal Penalty- usually involves forfeiting a sum equivalent to a certain amount of dividends. 3 month or 6 month penalties are common.
Holiday Club-A savings plan that will payout the first of November, for gift giving for the holidays.
IRA-A retirement plan that allows individuals to enjoy tax advantages and save for retirement.
Loans-providing credit to members for autos, boats, home, home remodeling, equity loans, tuition and many more. Loans are granted on the basis of collateral, the personal character, and the credit history/credit score of the borrower.
NCUA Share Insurance-Share insurance protects a member’s share balance against loss if a credit union fails and government regulators liquidate it. Such insurance guarantees that credit union members don’t lose all their savings if a credit union is closed. This insurance covers all types of share savings accounts. Can be compared with FDIC.
Non-sufficient Funds-Occasionally, a share draft may be returned to the credit union marked NSF. There may be several reasons, member has made math error and has written check for more than the account balance. Or member planned to deposit before the check was cleared through the account. In any event, the NSF draft is expensive for the credit union because it means the draft has to be resubmitted and the funds collected
Overdraft Protection-A Line of credit that is combined with the member’s share draft account, and doubles as over draft protection. The member merely writes a share draft to access the line of credit.
Payroll Deduction-On paydays, loan payments or savings deposits are automatically transferred from members’ paychecks by their payroll department. The member has to authorize the deduction in advance.
Principal-The amount of money on which the dividend on a savings account or interest on a loan is to be calculated.
Share Account (Savings)-Asset amount of money a member deposits in a credit union to become a member. The amount has a stated par (minimum) value and pays dividends. Par Value at SAFCU is $5.
Share Certificates-Require members to keep their funds in the account for a specified period of time, referred to the term of the account. Share certificates may be withdrawn on the maturity date of the account. If the member wants to withdraw funds before the maturity date, the credit union usually assesses a penalty.
Share Drafts-“Draft†accounts are credit union checking accounts.
Simple Interest-A loan on which interest is computed and charged on the actual balance each day.
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