FBLA Personal Finance

401(k) plan

An employer-based plan whereby employees set aside money for retirement that is sometimes matched by employers

403(b) plan

A retirement account for employees of schools, tax-exempt organizations, and government units

Adjusted balance method

A way to compute finance charges in which creditors add finance charges after subtracting payments made during the billing period

Adjusted gross income

Income minus allowable exclusions (such as IRAs, alimony, life insurance, child support)

AMEX

The American Stock Exchange, which is one of the organized stock markets in the US

Amount due

When referring to credit, the minimum monthly payment you must make, not the total amount you owe

Annual fee

The annual membership fee, if any, to have a credit card

Annual Percentage Rate (APR)

The cost of credit for one year expressed as a percentage

Annual percentage yield (APY)

The true or effective rate of interest when compounding is taken into effect.

Annual report

Information about a company that allows a potential investor to make an investment decision. Annual reports are distributed by the company and are generally designed to show the company in a favorable light

Annuity

A contract or agreement whereby money is set aside for a specified period of time, at the end of which you begin receiving payments at regular intervals. a financial product that pays out a fixed stream of payments to an individual, primarily used as an income stream for retirees.

Assets

Property that can be used to repay debt, such as stocks and bonds or a car

At The Market

An order to buy or sell a stock at the best price currently available

Automated Teller Machine (ATM)

Electronic terminals located on bank premises or elsewhere, through which customers of financial institutions may make deposits, withdrawals, or other transactions as they would through a bank teller

Automatic deductions

Authorized deductions from your checking account, such as for insurance premiums, safe deposit box fees, or other payments

Available credit

The unused portion of the credit for which one is eligible

Average daily balance

A method of computing finance charges in which creditors add your balances for each day in a billing period, and then divide by the number of days in the period

Back-end load

A mutual fund where you pay a commission when you sell your shares

Balance

To reconcile the sums of the debits and credits of an account

Balanced fund

A mutual fund that invests in a mix of stocks and bonds to minimize risks

Bank

A financial institutions that accumulates deposits and channels money into lending activities

Bank statement

The record of checks paid, deposits made, and all other activity on an account

Bankruptcy

Legally insolvent; not capable of paying bills

Bear market

A market characterized by falling prices of 15 percent or more; characterized by pessimism

Bearer bond (coupon bond)

A bond not registered by an issuing company

Benefits

Sick pay, vacation time, and other company-provided supplements to income

Billing cycle

The number of days between your last bill and your current bill

Billing error

Any mistake in your monthly statement as defined by the Fair Credit Billing Act

Blank endorsement

The signature of the payee written on the back of the check exactly as it appears on the front of the check

Blue chip stocks

Stocks in the biggest, most established, and consistently profitable companies in the United States

Bond fund

A mutual fund that invests in government, corporate, or tax-exempt bonds with different maturity dates

Bonds

Debt obligations of corporations or the government

Borrower

The person who borrows money or uses another form of credit

Broker

A person who buys and sells stock on an exchange, on behalf of a buyer or investor

Budget

An organized plan whereby you match your expected income to your expected outflow

Bull market

A rising stock market (in both volume and prices), which is characterized by optimism

Business

An organization that produces goods and services. Most businesses try to earn a profit

Call option

The right to buy stock or futures contracts at a fixed price until the expiration date

Callable bond

Bonds that can be recalled, or paid off, before their maturity date

Canceled check

Checks the bank has processed

Capacity

The ability to repay a loan from present income

Capital

Wealth available to produce more wealth; assets of a person or business after liabilities are deducted

Capital gains

Profits from sale of assets, such as stocks, bonds or real estate that are not taxed until the asset is sold

Capital goods

Buildings, tools, machinery and other manufactured items used to produce goods and services

Cardholder agreement

A written contract that sets forth the terms that apply to a credit or charge card account, including the interest rate charged, the method of calculating interest and any annual or transaction fees

Cash advance

A loan taken out by charging an amount of cash to a credit card

Cash flow (positive)

The excess of income over and above expenses

Cashier's check

A check written by a bank on its own funds in exchange for payment by an individual

Certificate of deposit

A time certificate representing a sum of money deposited for a set length of time, such as six months

Certified check

A personal check that the bank guarantees to be good

Character

A trait of creditworthiness indicating a responsible attitude toward paying debts

Charge card

A credit card which requires full payment of the bill each month; no interest is charged

Check card

Also called a debit card it works like a check. It is used to access funds from your checking account

Checkbook register

A record of deposits to and withdrawals from a checking account.

Checking account

A banking service wherein money is deposited into an account and checks are written to withdraw money as needed

Closed-end credit

A contract for the loan of a specified amount in which the contract issued tells the amount of purchase, the total finance charge, and the amount of each payment

Co-signer

Someone who signs a loan with the borrower and promises to assume the responsibility of repaying the debt in the event that the borrower does not repay it

Collateral

Savings, bonds, insurance policy, jewelry, property or other item that is pledged to pay off a loan or other debt if payments are not made according to the contract; also called security

Commission

Pay based on a percentage of sales

Common stock

A class of stock whereby the person who owns the stock shares directly in the success or failure of the business

Compound interest

Interest paid on the original principal plus the accumulated interest

Consumer

A customer who buys the products or services a business produces

Consumer Price Index (CPI)

A special average of many prices of goods and services that people often buy; the CPI is calculated by the US Department of commerce

Convertible bond

A bond that can be be exchanged for common stock at maturity

Cooperative

A type of corporation, like a credit union, that is owned by the people who use its services

Corporate bond

An IOU issued by a corporation in owner to borrow money

Corporation

A business that is owned by stockholders and has rights and responsibilities just like a person

Credit

The privilege of borrowing something now, with the agreement to pay for it later

Credit bureau

A for-profit company that is in the business of accumulating, storing, and distributing credit information

Credit card

A card that allows you to buy items on credit and pay off your debt over time

Credit history

A record of your credit performance

Credit limit

The amount of credit you are authorized to use

Credit report

A written report issued by a credit bureau that contains relevant information about a person's creditworthiness

Credit scoring system

A statistical system used to rate credit applicants according to various characteristics relevant to creditworthiness

Credit union

A democratically owned and controlled not-for-profit financial cooperative that offers a variety of savings and lending services to members

Creditor

Any person to whom one owes money or goods

Creditworthiness

Past and future ability to repay debts

Customer

A person who buys the goods or services produced by a business

Debit card

A plastic card that consumers may use to make purchases, withdrawals, or other types of electronic fund transfers. Use of a debit card results in an immediate transfer of funds

Debt

Money owed

Debt balance

amount still owed on a debt

Debt collector

A person or company hired by a creditor to collect the balance due on overdue accounts

Debt load

The amount of outstanding debt at a particular point in time

Debtor

One who owes money to another

Deductions

Amount subtracted from gross pay

Depreciation

Loss in value of a consumer good during its lifetime often associated with appliances and vehicles

Direct investments

Investments in which the investor holds legal title to a property

Discharged debt

A debt that is no longer owed after declaration of bankruptcy

Discretionary income

Money that is left over when the bills have been paid

Disposable income

The money you have to spend or save as you wish after taxes, social security, and other required and optional deductions have been withheld from your gross pay

Diversification

Holding a variety of securities so an occasional loss in one can be offset by gains in others

Dividends

A distribution of money or stock that a corporation pays to stockholders

Dollar-cost averaging

The process of making regular payments or investing the same amount periodically

Dow Jones Industrial Average

An indicator of 30 industrial stock prices used to measure the general level of stock prices

Down payment

An amount given as security for a loan to ensure that other remaining payments will be made

Drafts

Checks used to withdraw money from an account

Due date

The date payment is due to a creditor

Early withdrawal penalties

Fees charged to depositors who take money from their account before a minimum time period has expired

Earnings per share

A corporation's after-tax earnings divided by the number of shares of common stock outstanding

Electronic Fund Transfer systems

A variety of systems and technologies for transferring funds electronically rather than by check