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If you are current on your credit card payments th … moreIf you are current on your credit card payments then the amount due is equal to the minimum monthly payment, which is usually between 2 and 5 percent of your credit card balance.
If you are delinquent on your credit card then the amount due is the amount that you need to pay in order to get back into good standing. More specifically, the amount due in this scenario is the sum of all the consecutive minimum payments that you have missed plus the amount of the upcoming minimum payment. For example, if you just missed one minimum payment of $30 and the upcoming minimum payment is another $30 then the amount due will be $60.
If you are delinquent on your credit card then the amount due is the amount that you need to pay in order to get back into good standing. More specifically, the amount due in this scenario is the sum of all the consecutive minimum payments that you have missed plus the amount of the upcoming minimum payment. For example, if you just missed one minimum payment of $30 and the upcoming minimum payment is another $30 then the amount due will be $60.
The rate at which amounts owed to a bank on a cred … moreThe rate at which amounts owed to a bank on a credit card or loan account appreciate in value over time, increasing one's debt. In other words, this percentage of your average balance over the course of the month or year is tacked onto what you owe. When it comes to credit cards, the APR, or interest rate, is only relevant when you don't pay for the total amount of your purchases in a respective month.
For example, if your loan has a 10% APR, you will pay $10 annually for every hundred dollars of balance.
Usually, different types of credit card transactions have different APRs. One card might have a different APR for cash advances than for purchases or balance transfers. Also, some credit cards appeal to consumers with a low introductory APR; for example, 0% APR on balance transfers (or purchases) for six months.
For example, if your loan has a 10% APR, you will pay $10 annually for every hundred dollars of balance.
Usually, different types of credit card transactions have different APRs. One card might have a different APR for cash advances than for purchases or balance transfers. Also, some credit cards appeal to consumers with a low introductory APR; for example, 0% APR on balance transfers (or purchases) for six months.
Someone who is allowed to use credit resources.
Moving the balance from one of your credit cards t … moreMoving the balance from one of your credit cards to a different credit card.
On all credit cards you can always transfer a balance away from them (i.e. to another credit card). However, not all credit cards allow you to transfer a balance into them.
On all credit cards you can always transfer a balance away from them (i.e. to another credit card). However, not all credit cards allow you to transfer a balance into them.
A debt that cannot be collected, which is written … moreA debt that cannot be collected, which is written off as a loss against a lender's taxes. Debt must be charged off in three cases: if it is a certain number of days past due (120 days for a loan and 180 days for credit card debt), if the debt holder dies, or if the debt holder goes bankrupt.
A charged-off debt is not forgiven, though, and it stays on your credit report for 7 years. Lenders also generally sell charged-off debt to collection agencies who will attempt to recoup the debt through various means including lawsuit until its statute of limitations runs out, a time period that varies by state.
A charged-off debt is not forgiven, though, and it stays on your credit report for 7 years. Lenders also generally sell charged-off debt to collection agencies who will attempt to recoup the debt through various means including lawsuit until its statute of limitations runs out, a time period that varies by state.
Something of value that is pledged to pay off a lo … moreSomething of value that is pledged to pay off a loan or debt if payments aren't made according to the agreement. Also called security.
Mortgages and car loans are known as "secured" loans given that the underlying assets they are used to purchase (i.e. a house or a car) serve as collateral for the original loan. In other words, if a borrower does not make payments as originally agreed, the lender may be able to sell the aforementioned assets in order to recoup amounts owed.
Mortgages and car loans are known as "secured" loans given that the underlying assets they are used to purchase (i.e. a house or a car) serve as collateral for the original loan. In other words, if a borrower does not make payments as originally agreed, the lender may be able to sell the aforementioned assets in order to recoup amounts owed.
A financial institution that issues credit cards. … moreA financial institution that issues credit cards. Most of the time a credit card's issuer (e.g. Bank of America or Capital One) will be different from the network it is on (i.e. Visa, MasterCard, American Express, and Discover). The two exceptions are American Express and Discover, which are networks that began issuing their own cards directly.
An up-to-date record of not only how you have used … moreAn up-to-date record of not only how you have used credit in the past, but also your history of payments toward other financial obligations, such as loans, rent, etc. Your credit history is encompassed in your credit reports with the three major credit bureaus (Experian, Equifax, and TransUnion), and may contain information about what types of financial accounts you open, whether you make payments on time or not, how much available credit you have, whether you've defaulted on any obligations, and certain public records such as court judgments.
Your credit score is based on your credit history. If you use your credit responsibly, your credit history will be more positive than if you default on your loans or make your payments after the deadline.
Your credit score is based on your credit history. If you use your credit responsibly, your credit history will be more positive than if you default on your loans or make your payments after the deadline.
The maximum amount you may charge on your credit c … moreThe maximum amount you may charge on your credit card. Some credit cards have different limits for purchases and cash advances.
Your credit line is closely tied to your credit standing and income. Issuers are more likely to trust you with a lot of spending power if you have a history of paying your financial obligations on time and are likely to have plenty of disposable income to make payments in the future.
Your credit line is closely tied to your credit standing and income. Issuers are more likely to trust you with a lot of spending power if you have a history of paying your financial obligations on time and are likely to have plenty of disposable income to make payments in the future.
A qualitative term that reflects where one's credi … moreA qualitative term that reflects where one's credit stands on a rating from "excellent" to "bad".
On the other hand, Credit Rating / Credit Score is a quantitative assessment of the strength of your credit: the higher your credit score, the higher your credit standing.
On the other hand, Credit Rating / Credit Score is a quantitative assessment of the strength of your credit: the higher your credit score, the higher your credit standing.
A nonprofit financial cooperative that offers its … moreA nonprofit financial cooperative that offers its members a variety of savings and credit services. Credit unions typically have some sort of membership requirement related to the groups you belong to or where you live, go to school, work, or worship.
While credit unions typically offer the same suit of products and services as banks, they're often able to provide better terms because they are not concerned with turning a profit. Credit unions do have certain drawbacks, however, as they are typically localized, may not offer round-the-clock customer service, and are unlikely to have as many branches and ATM locations as large banks.
The National Credit Union Administration (NCUA) insures funds deposited at credit unions for up to $250,000 per accountholder.
While credit unions typically offer the same suit of products and services as banks, they're often able to provide better terms because they are not concerned with turning a profit. Credit unions do have certain drawbacks, however, as they are typically localized, may not offer round-the-clock customer service, and are unlikely to have as many branches and ATM locations as large banks.
The National Credit Union Administration (NCUA) insures funds deposited at credit unions for up to $250,000 per accountholder.
Violation of your terms and conditions agreement; … moreViolation of your terms and conditions agreement; failure to pay your loan / credit card as agreed.
One of the three credit bureaus/credit reporting a … moreOne of the three credit bureaus/credit reporting agencies in the United States, along with Experian and TransUnion. Equifax, founded in 1899, is the oldest of the three major credit bureaus and has information on more than 400 million consumers nationwide. It is based in Atlanta, Ga.
One of the three credit bureaus / credit reporting … moreOne of the three credit bureaus / credit reporting agencies in the United States. Formerly known as TRW.
One of the three credit bureaus/credit reporting agencies in the United States. Formerly known as TRW.
Like most other credit bureaus, Experian has also begun offering its own credit scores in recent years. However, it is the only major credit bureau that you cannot get a credit score based on. Experian FICO scores are still sold to banks, but in 1999 Experian pulled out of the myFICO agreement that allowed FICO, the nationâ??s biggest credit scoring company, to provide scores based on data from its reports to consumers.
One of the three credit bureaus/credit reporting agencies in the United States. Formerly known as TRW.
Like most other credit bureaus, Experian has also begun offering its own credit scores in recent years. However, it is the only major credit bureau that you cannot get a credit score based on. Experian FICO scores are still sold to banks, but in 1999 Experian pulled out of the myFICO agreement that allowed FICO, the nationâ??s biggest credit scoring company, to provide scores based on data from its reports to consumers.
The time during which you can pay your monthly cre … moreThe time during which you can pay your monthly credit card bill before interest begins to accrue. The Grace Period generally lasts for 20-30 days after your bill is assessed. Not all credit cards offer a Grace Period, and none do when you are revolving a balance, in which case purchases begin to incur interest immediately.
Be wary of credit cards that do not have a grace period (i.e. 0 days) because even if you pay your bill in full every month, you will accrue interest charges every day that you have a balance on the card.
Only purchases have a grace period. Cash Advances and Balance Transfers do not have a grace period and interest charges therefore get assessed immediately.
Be wary of credit cards that do not have a grace period (i.e. 0 days) because even if you pay your bill in full every month, you will accrue interest charges every day that you have a balance on the card.
Only purchases have a grace period. Cash Advances and Balance Transfers do not have a grace period and interest charges therefore get assessed immediately.
Monies billed on the balance of a credit card or l … moreMonies billed on the balance of a credit card or loan, usually expressed as a percentage of the amount of money owed. The specific rate of interest is referred to as an Annual Percentage Rate (APR).
An interest rate based on the banking system's flu … moreAn interest rate based on the banking system's fluctuating rate, usually in accordance with the Prime Rate.
Along with Experian and Equifax, TransUnion is one … moreAlong with Experian and Equifax, TransUnion is one of the three major credit bureaus/credit reporting agencies in the United States. It is the smallest of the big three, was founded in 1968, and is headquartered in Chicago, Illinois.
A credit card obtained by using a cash deposit or … moreA credit card obtained by using a cash deposit or other collateral to guarantee the credit card. The credit limit is based upon the amount of deposit or collateral.
The ratio of credit spent to total available credi … moreThe ratio of credit spent to total available credit.
Bank:
A financial institution that offers lending and sa … moreA financial institution that offers lending and savings services, and might also branch out into credit cards. Unlike credit unions, banks are businesses (often with responsibilities to shareholders) that exist to turn a profit. In general, they make money by lending the funds that consumers place in deposit accounts (e.g. checking accounts and savings accounts) to other consumers in the form of mortgages, auto loans, etc., for which they charge a higher rate of interest than they pay out on the original deposits.
Banks vary considerably in size and many no longer even have physical locations, operating strictly online. Money that is deposited into a bank account is insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per accountholder per bank.
Banks vary considerably in size and many no longer even have physical locations, operating strictly online. Money that is deposited into a bank account is insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per accountholder per bank.
The number of months that you can enjoy the "Intro … moreThe number of months that you can enjoy the "Introductory Rate" of your new credit card or loan, assuming you do not go into default.
If an "Introductory Period" is listed as a range (for example, 3 - 9 months), the final period will be determined by the credit card company after you submit your application. Their decision will be based on the strength of your credit history.
If an "Introductory Period" is listed as a range (for example, 3 - 9 months), the final period will be determined by the credit card company after you submit your application. Their decision will be based on the strength of your credit history.
A numeric score (between 300-850) that indicates w … moreA numeric score (between 300-850) that indicates whether your credit history is good or bad. The FICO Score is comprised of the following five weighted factors: 1) Payment History 2) Amounts Owed 3) Length of Credit History, 4) New Credit, 5) Types of Credit Used.
While there are numerous other credit scores in use in the United States, the FICO Score is undoubtedly the one favored by the most financial decision makers, such as lenders and credit card underwriters. In addition, most consumers are not aware of the fact that everyone has three different FICO Scores, one based on each of their three major credit reports (Experian, Equifax, and TransUnion).
While there are numerous other credit scores in use in the United States, the FICO Score is undoubtedly the one favored by the most financial decision makers, such as lenders and credit card underwriters. In addition, most consumers are not aware of the fact that everyone has three different FICO Scores, one based on each of their three major credit reports (Experian, Equifax, and TransUnion).
FICO:
The most widely known type of credit score, FICO i … moreThe most widely known type of credit score, FICO is a credit score tha is developed by the Fair Isaac Corporation (FICO).
It takes values between 300 and 850. The higher the better.
It takes values between 300 and 850. The higher the better.
The most common types of rewards (i.e. rewards cur … moreThe most common types of rewards (i.e. rewards currencies) are miles, points and cash back.
-- "Miles" will usually give you either:
Miles on the frequent flyer program of a particular airline (e.g. Delta Miles) OR
Miles on a credit card company's rewards program (e.g. Capital One Miles)
-- "Cash Back" will give you Cash (or a "Rebate") that is a percentage of the purchases you make (e.g. 1% Cash Back)
-- "Points" usually give you either:
"Hotel Points" on the rewards program of a particular hotel chain (e.g. Hilton points) OR
"Points" within a credit card company's rewards program (e.g. American Express Membership Rewards Points), which can usually be redeemed for merchandise, gift certificates, and travel.
-- "Miles" will usually give you either:
Miles on the frequent flyer program of a particular airline (e.g. Delta Miles) OR
Miles on a credit card company's rewards program (e.g. Capital One Miles)
-- "Cash Back" will give you Cash (or a "Rebate") that is a percentage of the purchases you make (e.g. 1% Cash Back)
-- "Points" usually give you either:
"Hotel Points" on the rewards program of a particular hotel chain (e.g. Hilton points) OR
"Points" within a credit card company's rewards program (e.g. American Express Membership Rewards Points), which can usually be redeemed for merchandise, gift certificates, and travel.
Some rewards credit cards give new cardholders ext … moreSome rewards credit cards give new cardholders extra points, miles, or cash back after they make their first purchase or spend above a certain amount within a specified period of time or for some other reason.
As the name suggests, this is a one-time fee that … moreAs the name suggests, this is a one-time fee that you will get assessed when you activate your new account.
A legal procedure that allows businesses or certai … moreA legal procedure that allows businesses or certain individuals to to reorganize their debts under a court-approved plan while receiving protection from lawsuits brought by creditors during the reorganization period.
Chapter 11 bankruptcy essentially buys an individual or organization time to meet their financial obligations and provides for these debts to be paid over time. Debtors are often able to take out loans with favorable rates to pay off existing debts or cancel existing contracts in order to garner financial relief under Chapter 11 bankruptcy. If a companyâ??s debts exceed its assets, the ownersâ?? rights are transferred the companyâ??s creditors under this type of bankruptcy in order to satisfy the ownersâ?? financial obligations.
Chapter 11 is generally regarded as the most expensive and complex type of bankruptcy.
Chapter 11 bankruptcy essentially buys an individual or organization time to meet their financial obligations and provides for these debts to be paid over time. Debtors are often able to take out loans with favorable rates to pay off existing debts or cancel existing contracts in order to garner financial relief under Chapter 11 bankruptcy. If a companyâ??s debts exceed its assets, the ownersâ?? rights are transferred the companyâ??s creditors under this type of bankruptcy in order to satisfy the ownersâ?? financial obligations.
Chapter 11 is generally regarded as the most expensive and complex type of bankruptcy.
A type of bankruptcy that enables debtors to propo … moreA type of bankruptcy that enables debtors to propose a 3-to-5 year payment plan that provides for the repayment of existing debts over time using future income. As such, this type of bankruptcy is only for individuals with regular income and relatively low debt levels.
Under Chapter 13 bankruptcy, certain â??priority debts,â?? including child support, alimony, employee wages, and delinquent taxes, must be repaid in full. The repayment plan must also include oneâ??s regular payments on their principal dwelling and any delinquent amounts, while payments on other secured debts can be spread across the life of the payment plan. Only whatever disposable income is left over after making payments toward these aforementioned obligations will be put toward unsecured debts like medical payments and credit card balances.
Failure to repay your debt obligations in full results in your bankruptcy being classified as non-discharged, which means information about it will remain on your credit reports for 10 years. If you fulfill your obligations, your debt will be discharged, and bankruptcy information will only remain on your credit reports for 7 years.
Under Chapter 13 bankruptcy, certain â??priority debts,â?? including child support, alimony, employee wages, and delinquent taxes, must be repaid in full. The repayment plan must also include oneâ??s regular payments on their principal dwelling and any delinquent amounts, while payments on other secured debts can be spread across the life of the payment plan. Only whatever disposable income is left over after making payments toward these aforementioned obligations will be put toward unsecured debts like medical payments and credit card balances.
Failure to repay your debt obligations in full results in your bankruptcy being classified as non-discharged, which means information about it will remain on your credit reports for 10 years. If you fulfill your obligations, your debt will be discharged, and bankruptcy information will only remain on your credit reports for 7 years.
A type of bankruptcy in which most of someone's de … moreA type of bankruptcy in which most of someone's debts are forgiven as a result of the court-supervised liquidation of most of their assets. Assets are turned over to a court-appointed trustee who provides for their sale and then distributes funds to owed creditors based on certain priority rules.
A number of assets are exempt from liquidation under Chapter 7 bankruptcy, and while the exact list varies by state, it usually includes one's primary vehicle, clothing and furniture, tools used for business purposes, and at least some home equity. Similarly, some debts may not be discharged as a result of Chapter 7 bankruptcy, including student loans, child support, and certain taxes.
A number of assets are exempt from liquidation under Chapter 7 bankruptcy, and while the exact list varies by state, it usually includes one's primary vehicle, clothing and furniture, tools used for business purposes, and at least some home equity. Similarly, some debts may not be discharged as a result of Chapter 7 bankruptcy, including student loans, child support, and certain taxes.
This is a fee that you might get charged when you … moreThis is a fee that you might get charged when you have not used your account for any transactions over an extended period of time (e.g. 90 days).
Inactivity fees are usually charged on a monthly basis (in addition to a standard monthly fee, if applicable) until you make a transaction.
Inactivity fees are usually charged on a monthly basis (in addition to a standard monthly fee, if applicable) until you make a transaction.
Fancy term for saying that you are late on a loan … moreFancy term for saying that you are late on a loan or credit card payment.
Delinquency is measured in days, which correspond to the number of payments you have missed. That is why you'll sometimes hear "30 days delinquent" or "60 days delinquent", which would mean that you've missed one or two monthly payments, respectively, since your credit card or loan was in "good standing" (i.e. not late).
Delinquency is not reported to the major credit bureaus and you therefore do not incur credit score damage as a result of it until you have missed two consecutive payments (i.e. you're at least 60 days delinquency). In order to return your account to good standing, you must make payments for the number of months behind you are, plus the current month.
Delinquency is measured in days, which correspond to the number of payments you have missed. That is why you'll sometimes hear "30 days delinquent" or "60 days delinquent", which would mean that you've missed one or two monthly payments, respectively, since your credit card or loan was in "good standing" (i.e. not late).
Delinquency is not reported to the major credit bureaus and you therefore do not incur credit score damage as a result of it until you have missed two consecutive payments (i.e. you're at least 60 days delinquency). In order to return your account to good standing, you must make payments for the number of months behind you are, plus the current month.
A reorganization plan specifically for family farm … moreA reorganization plan specifically for family farmers or family fishermen with debts within a certain range. Chapter 12 bankruptcy requires a debtor to propose a plan that provides for the repayment of their creditors within three-to-five years. This plan may entail the restructuring of current debts, the waiver of defaults, and the liquidation of farming or fishing equipment.
Both individuals and corporations are eligible for Chapter 12 bankruptcy, though they must demonstrate that their majority of their income derives from farming or fishing.
Both individuals and corporations are eligible for Chapter 12 bankruptcy, though they must demonstrate that their majority of their income derives from farming or fishing.
The least amount of money that you can have in a b … moreThe least amount of money that you can have in a bank account without incurring a monthly fee. Not all bank accounts have minimum balance requirements, but they have become increasingly common following the Durbin Amendment, which made checking accounts less profitable for banks. Of the bank accounts that do have some sort of minimum balance stipulation, some require that all accountholders maintain balances above this threshold in order to avoid a penalty fee, while other take a reverse approach, allowing consumers who meet balance requirements to avoid standard monthly charges.
Discount points are a form of prepaid interest tha … moreDiscount points are a form of prepaid interest that can be paid at the time of origination in order to lower the interest rate charged for the duration of a mortgage. One point costs 1% of the loan amount. For example, 1 discount point on a $100,000 mortgage would cost $1,000. Discount points are tax deductible in the year in which they are bought.
In general, buying one discount point will lower the interest rate on a 30-year mortgage by 0.125%, and the longer you plan on having your mortgage, the more sense it makes to buy a discount point.
In order to figure out whether purchasing discount points makes sense in your particular situation, you must determine 1) by exactly how much the discount point(s) will lower your interest rate; and 2) how the cost of purchasing the discount point(s) compares to the interest you will save with the lower rate over the amount of time you expect to have the loan in question.
Sometimes lenders also charge "origination points" to cover part of the cost of making a loan.
In general, buying one discount point will lower the interest rate on a 30-year mortgage by 0.125%, and the longer you plan on having your mortgage, the more sense it makes to buy a discount point.
In order to figure out whether purchasing discount points makes sense in your particular situation, you must determine 1) by exactly how much the discount point(s) will lower your interest rate; and 2) how the cost of purchasing the discount point(s) compares to the interest you will save with the lower rate over the amount of time you expect to have the loan in question.
Sometimes lenders also charge "origination points" to cover part of the cost of making a loan.
Closing costs are the fees and expenses that need … moreClosing costs are the fees and expenses that need to be paid in order to get finalize a mortgage or home equity loan. The closing costs you will be required to pay may vary from loan to loan, as some are state or federally mandated, while others are contractually provided for and can often be negotiated away. In addition, a borrower is not always required to foot the closing cost bill alone, as the seller will often chip in so as to secure a higher purchase amount or interest rate.
While there are no naming conventions for closing costs, meaning they may be referred to differently by different people, some of the most common are:
- Application Fee
- Appraisal Fees
- Document Preparation
- Notary Fee
- Recording Fee
- Survey Fee
- Title Service Fees
- Assumption Fee
- Attorney's Fees
- Brokerage Commission
- Discount Points
While there are no naming conventions for closing costs, meaning they may be referred to differently by different people, some of the most common are:
- Application Fee
- Appraisal Fees
- Document Preparation
- Notary Fee
- Recording Fee
- Survey Fee
- Title Service Fees
- Assumption Fee
- Attorney's Fees
- Brokerage Commission
- Discount Points
Indicates not only the length of time in which you … moreIndicates not only the length of time in which you are required to pay back your mortgage in its entirety, but also whether its interest rate will be fixed, variable or a mixture of the two. Some of the most common types of mortgages are 30-year fixed mortgages and 5/1 ARMs.
Fixed rate mortgages, like the 30-year fixed mortgage, have the same interest rate for the entire term, which could be any number of years.
Variable mortgages, more commonly known as adjustable-rate mortgages (ARMs), all have 30-year terms and offer a fixed interest rate for the first few years before switching to a variable interest rate that depends on either the Libor Rate or the Prime Rate. For example, a 5/1 ARM is an adjustable rate mortgage that has a fixed interest rate for the first 5 years and a variable interest rate that changes on an annual basis for the remaining 25 years.
Fixed rate mortgages, like the 30-year fixed mortgage, have the same interest rate for the entire term, which could be any number of years.
Variable mortgages, more commonly known as adjustable-rate mortgages (ARMs), all have 30-year terms and offer a fixed interest rate for the first few years before switching to a variable interest rate that depends on either the Libor Rate or the Prime Rate. For example, a 5/1 ARM is an adjustable rate mortgage that has a fixed interest rate for the first 5 years and a variable interest rate that changes on an annual basis for the remaining 25 years.
Title is another word for deed and is a legal docu … moreTitle is another word for deed and is a legal document that denotes ownership in a piece of property, typically a vehicle or house. When you finance such a purchase, your lender will hold the title until you have paid off your loan, at which point the title will be transferred to you through a process known as conveyance.
Oftentimes, prior to making a significant purchase, a title check will need to be done to ensure that the title is "clear," meaning there are no ownership disputes or encumbrances, such as an existing mortgage or governmental levy, attached to it.
Aside from ownership, a title may convey a number of other rights, including the right to put the property up as collateral for a loan, the right to enclose a property (e.g. put a fence around it), the right to allow others to use your property, etc.
Oftentimes, prior to making a significant purchase, a title check will need to be done to ensure that the title is "clear," meaning there are no ownership disputes or encumbrances, such as an existing mortgage or governmental levy, attached to it.
Aside from ownership, a title may convey a number of other rights, including the right to put the property up as collateral for a loan, the right to enclose a property (e.g. put a fence around it), the right to allow others to use your property, etc.
Refers to a vehicle's worth, as stated by the Kell … moreRefers to a vehicle's worth, as stated by the Kelley Blue Book, a widely-used reference guide that lists prices and values for new and used vehicles of all makes, models, and years. While people generally refer to Blue Book value when discussing car prices, it also contains information about motorcycles, RVs, personal watercraft, and snowmobiles.
For new vehicles, the Kelley Blue Book lists the Manufacturer Suggested Retail Price (MSRP), dealer sale price, and what other buyers paid (if you are accessing the information online). For used vehicles, it provides retail value, trade-in value, and private party value.
Private sellers often reference a car's Blue Book value in order to establish a fair sales price, and insurance companies use it to determine whether the car is worth fixing or should be declared a total loss.
For new vehicles, the Kelley Blue Book lists the Manufacturer Suggested Retail Price (MSRP), dealer sale price, and what other buyers paid (if you are accessing the information online). For used vehicles, it provides retail value, trade-in value, and private party value.
Private sellers often reference a car's Blue Book value in order to establish a fair sales price, and insurance companies use it to determine whether the car is worth fixing or should be declared a total loss.
Purchase loans for used cars typically charge high … morePurchase loans for used cars typically charge higher interest rates and have shorter terms than those for new cars. This speaks directly to the inherent differences between new and used cars. New cars are effective collateral given that they will still hold a great deal of value if a buyer defaults on his loan after a few months or even years. The lender can therefore simply sell the vehicle to recoup amounts owed. In addition to not being worth very much to begin with, used cars depreciate in value very quickly. Lenders therefore must mitigate risk in other ways.
New car loans typically have lower interest rates … moreNew car loans typically have lower interest rates and longer terms than their used counterparts because new cars will theoretically have enough trade-in value for the lender to recoup amounts owed to him if a borrower defaults on his obligations, while used car loan risk must be mitigated upfront.
Different institutions -- including banks, credit unions, and the financing arms of dealerships themselves-- offer new car loans, and it's a good idea to compare rates from all of them in order to find the best deal.
Different institutions -- including banks, credit unions, and the financing arms of dealerships themselves-- offer new car loans, and it's a good idea to compare rates from all of them in order to find the best deal.
An overdraft is when you write a check or make a t … moreAn overdraft is when you write a check or make a transaction that requires more money than you have in your checking account. Financial institutions will cover, at their discretion, the remaining amount for a fee: typically $30 - $35. Some institutions may charge a different amount for bounced checks, whether you're enrolled into overdraft service or not! This is usually a smaller fee than the one for overdraft transactions ( between $8 - $15).
Having borrowed more than one can afford to repay. … moreHaving borrowed more than one can afford to repay.
This term is used primarily in the context of business to describe a company that can no longer pay the interest on what it owes, but it can apply to personal finance as well. Consumers are said to be overleveraging themselves when they are using credit and/or loans to spend more than they bring in each month.
This term is used primarily in the context of business to describe a company that can no longer pay the interest on what it owes, but it can apply to personal finance as well. Consumers are said to be overleveraging themselves when they are using credit and/or loans to spend more than they bring in each month.
Also known as a "rainy day fund," an emergency fun … moreAlso known as a "rainy day fund," an emergency fund is money set aside as a type of financial safety net in case unexpected expenses or some other hardship occurs.
A security representing ownership in a corporation … moreA security representing ownership in a corporation. Stocks can be bought and sold, and if a company is profitable, stock holders receive annual dividends representing their respective ownership stake in the company.
There are three different types of stock: common stock, preferred stock, and capital stock. Stocks are traded on a number of different national and international exchanges, including the New York Stock Exchange, the Nasdaq Stock Exchange, and the Tokyo Stock Exchange.
There are three different types of stock: common stock, preferred stock, and capital stock. Stocks are traded on a number of different national and international exchanges, including the New York Stock Exchange, the Nasdaq Stock Exchange, and the Tokyo Stock Exchange.
Bond:
A type of investment that involves an investor loa … moreA type of investment that involves an investor loaning money to a company or government entity at a specified interest rate and for a defined period of time. Bond interest rates are based on the credit standing of the issuer and the time until maturity (i.e. when repayment must be made).
Entities, such as the US government, typically issue bonds so as to increase their liquidity in order to fund special projects and initiatives. Bonds tend to vary in length from 90 days to 30 years.
Bonds are considered one of the three primary types of assets, along with stocks and cash.
Entities, such as the US government, typically issue bonds so as to increase their liquidity in order to fund special projects and initiatives. Bonds tend to vary in length from 90 days to 30 years.
Bonds are considered one of the three primary types of assets, along with stocks and cash.
A portion of a company's earnings that is distribu … moreA portion of a company's earnings that is distributed to its shareholders at the discretion of the board of directors. Dividends may be paid in the form of cash, stock, or property and are typically paid on a quarterly basis.
A gradual decline in stock prices, reflecting a tr … moreA gradual decline in stock prices, reflecting a transition from investor optimism to concern. It is largely a subjective designation, but most agree that a 20% decline in a stock market's value over at least a two-month period qualifies as a bear market.
A gradual increase in the price of stocks over a c … moreA gradual increase in the price of stocks over a certain period of time. A bull market is often a precursor to economic recovery.
The amount that an insured party pays each time th … moreThe amount that an insured party pays each time they receive medical treatment as part of a cost-sharing agreement with the insurance company. A copayment (also known as a copay) is typically a fixed amount under $25, but it can vary based on the type of service provided (e.g. doctor's office visit vs. having a prescription filled).
Copayments are due at the time a service is provided.
Copayments are due at the time a service is provided.
The out-of-pocket cost a policyholder must pay bef … moreThe out-of-pocket cost a policyholder must pay before insurance will begin to pay for a claim.
Generally speaking, an insurance policy with low deductibles will have higher premiums than an insurance policy with high deductibles.
Generally speaking, an insurance policy with low deductibles will have higher premiums than an insurance policy with high deductibles.
A cost-sharing insurance structure that requires t … moreA cost-sharing insurance structure that requires the insured party to pay a certain percentage of his or her own medical bills after the deductible has been paid.
Coinsurance is similar to a plan that requires the insured to make a copayment; however, a copayment is a flat fee due each time medical services are rendered.
Coinsurance is similar to a plan that requires the insured to make a copayment; however, a copayment is a flat fee due each time medical services are rendered.
The recurring price of maintaining an insurance po … moreThe recurring price of maintaining an insurance policy, essentially a subscription fee.
Most insurance companies charge their customers monthly or annual premiums in return for their providing financial support if and when a covered event takes place. A premium differs from a copayment or coinsurance in the sense that it represents the basic cost of maintaining a policy and is not dependent on services rendered.
Most insurance companies charge their customers monthly or annual premiums in return for their providing financial support if and when a covered event takes place. A premium differs from a copayment or coinsurance in the sense that it represents the basic cost of maintaining a policy and is not dependent on services rendered.
A type of medical insurance in which care is monit … moreA type of medical insurance in which care is monitored by a central organization and the insured party can only visit certain doctors and hospitals.
POS insurance plans as well as the plans offered through HMOs and PPOs are considered managed care plans.
POS insurance plans as well as the plans offered through HMOs and PPOs are considered managed care plans.
Many loans allow you to sign up for an interest-on … moreMany loans allow you to sign up for an interest-only payment option at the time you take the loan out, giving you the freedom to either make a full payment -- both interest and part of the principal -- or pay only interest in any given month. Interest only-loans tend to have higher interest rates than conventional loans given the increased risk they represent for lenders. The higher rate, coupled with the fact that it takes longer to pay off a loan when only paying interest during certain months, means interest-only loans also generally wind up being more expensive for borrowers in the long run.
This type of payment structure is helpful for consumers who may not be able to truly afford a purchase at the time they make it but expect their financial situation to change in the near future.
This type of payment structure is helpful for consumers who may not be able to truly afford a purchase at the time they make it but expect their financial situation to change in the near future.
The guarantee that you will be approved for a part … moreThe guarantee that you will be approved for a particular financial product, should you wish to apply.
Pre-approval generally manifests itself in one of two ways. Credit card companies will often use publicly available information to identify consumers who comfortably qualify for certain credit card offers in order to more effectively target marketing. A consumer is more likely to sign up for a credit card for which they are assured of getting approved than respond to the chance simply to apply. In addition, many lenders will allow you to preliminarily apply for financing prior to determining what exactly you wish to purchase and will pre-approve you for a loan up to a certain amount, if you're qualified. This enables you to determine what you can afford and is often a prerequisite to seriously discussing the purchase of a home or car with the seller.
Pre-approval generally manifests itself in one of two ways. Credit card companies will often use publicly available information to identify consumers who comfortably qualify for certain credit card offers in order to more effectively target marketing. A consumer is more likely to sign up for a credit card for which they are assured of getting approved than respond to the chance simply to apply. In addition, many lenders will allow you to preliminarily apply for financing prior to determining what exactly you wish to purchase and will pre-approve you for a loan up to a certain amount, if you're qualified. This enables you to determine what you can afford and is often a prerequisite to seriously discussing the purchase of a home or car with the seller.
The amount you pay up front in "cash" when making … moreThe amount you pay up front in "cash" when making a significant purchase that will necessitate you taking out a loan in order to finance the rest of the transaction and pay off the remainder of the sale price over time.
The loan amount and terms you get approved for largely depend on your credit standing and income. The more responsible you've proven to be in handling past financial obligations and the more financially secure you are at the moment, the less of a perceived risk you will be to lenders and the better your interest rate and other key terms will be. Similarly, making a larger down payment and therefore relying on a loan to cover less of the purchase price will lessen a lender's level of concern since you're more invested in not defaulting on your loan and will too manifest itself in more advantageous loan terms.
The loan amount and terms you get approved for largely depend on your credit standing and income. The more responsible you've proven to be in handling past financial obligations and the more financially secure you are at the moment, the less of a perceived risk you will be to lenders and the better your interest rate and other key terms will be. Similarly, making a larger down payment and therefore relying on a loan to cover less of the purchase price will lessen a lender's level of concern since you're more invested in not defaulting on your loan and will too manifest itself in more advantageous loan terms.
The manner in which payments are divided over the … moreThe manner in which payments are divided over the course of a loan's term. Amoritization is commonly considered the most straightforward repayment model because it provides for equal payments over the life of a loan, and each payment contains both a portion of the principal loan amount and interest.
Your loan documents will generally include an amortization schedule, which will indicate when payments are due and how much they are.
Your loan documents will generally include an amortization schedule, which will indicate when payments are due and how much they are.
The length of time from when you take out a loan t … moreThe length of time from when you take out a loan to when it is required to be paid in full. Depending on the loan, this could be as short as a few months or as long as 30 years.
A loan's term, along with its interest rate and the amount to be borrowed, dictate the monthly payments you'll be required to make. A shorter-term loan will cost less overall given that you will be incurring less interest than with a longer loan of the same amount, but it will come with higher monthly payments given that you must pay off the same balance in a shorter period of time.
A loan's term, along with its interest rate and the amount to be borrowed, dictate the monthly payments you'll be required to make. A shorter-term loan will cost less overall given that you will be incurring less interest than with a longer loan of the same amount, but it will come with higher monthly payments given that you must pay off the same balance in a shorter period of time.
Also known as Private Mortgage Insurance, or just … moreAlso known as Private Mortgage Insurance, or just PMI, mortgage insurance protects lenders against financial losses caused by a borrower's inability to pay off a home loan. Federal law requires mortgage insurance for any home loan with a Loan-to-Value (LTV) ratio above 80% because borrowers who are unable to place a down payment of at least 20% are considered to be especially at risk of default.
While lenders are the ones who benefit from mortgage insurance, they typically require borrowers to fit the bill and factor it into the loan's monthly payment or ask for a lump-sum payment upfront. Borrowers may request that a mortgage insurance plan be cancelled once they've paid off 20% of their home's value, but lenders reserve the right to require it until the borrower reaches 50% equity.
While lenders are the ones who benefit from mortgage insurance, they typically require borrowers to fit the bill and factor it into the loan's monthly payment or ask for a lump-sum payment upfront. Borrowers may request that a mortgage insurance plan be cancelled once they've paid off 20% of their home's value, but lenders reserve the right to require it until the borrower reaches 50% equity.
A type of loan that allows you to borrow money, us … moreA type of loan that allows you to borrow money, using the value of a home you already own as collateral. Borrowers may either receive payment in a lump sum or on a monthly basis, and though what they borrow will accrue interest over time, repayment is not required until the borrower sells the home, moves, or passes away. That is the main differentiating factor between a reverse mortgage and a second mortgage, which requires regular monthly payments. Reverse mortgages are structured so as to prevent the value of the loan from exceeding that of the home during the loan's term.
More specifically, there are three types of reverse mortgages: 1) Single-purpose reverse mortgages -- The most affordable type of reverse mortgage, they are offered by state or local government agencies and non-profit organizations and may only be used for a designated purpose, such as home repairs; 2) Home Equity Conversion Mortgages -- Commonly known as HECMs, they are backed by the US Department of Housing and Urban Development, may be used for any purpose, and often charge high upfront costs; and 3) Propriety reverse mortgages -- Essentially the same thing as HECMs, they are offered by private companies and do not have federal backing.
To qualify for a reverse mortgage, you must be at least 62 and have significant equity in your home. Depending on the type of reverse mortgage you take out and the lender you use, there may be other requirements as well.
More specifically, there are three types of reverse mortgages: 1) Single-purpose reverse mortgages -- The most affordable type of reverse mortgage, they are offered by state or local government agencies and non-profit organizations and may only be used for a designated purpose, such as home repairs; 2) Home Equity Conversion Mortgages -- Commonly known as HECMs, they are backed by the US Department of Housing and Urban Development, may be used for any purpose, and often charge high upfront costs; and 3) Propriety reverse mortgages -- Essentially the same thing as HECMs, they are offered by private companies and do not have federal backing.
To qualify for a reverse mortgage, you must be at least 62 and have significant equity in your home. Depending on the type of reverse mortgage you take out and the lender you use, there may be other requirements as well.
The exact meaning varies based on the context in w … moreThe exact meaning varies based on the context in which it is used, but at its most basic, equity is the ownership stake one has in something.
In the context of home ownership, one's equity in a property is the difference between its current value and the amount remaining on the mortgage used to purchase it. If the mortgage has been paid in full, the homeowner has 100% equity. Real estate equity can be the basis for a number of different types of lending, including home equity loans, Home Equity Lines of Credit (HELOCs), and reverse mortgages.
In corporate accounting, shareholder equity is the combination of invested funds and retained earnings.
In the context of home ownership, one's equity in a property is the difference between its current value and the amount remaining on the mortgage used to purchase it. If the mortgage has been paid in full, the homeowner has 100% equity. Real estate equity can be the basis for a number of different types of lending, including home equity loans, Home Equity Lines of Credit (HELOCs), and reverse mortgages.
In corporate accounting, shareholder equity is the combination of invested funds and retained earnings.
A student loan that is not backed by the federal g … moreA student loan that is not backed by the federal government.
There are two primary types of private student loans: 1) School-channel loans -- Private loans that are approved by the borrower's school, generally have lower interest rates than other student loans, and which distribute funds directly to the school; and 2) Direct-to-consumer loans -- Loans that disburse funds to the borrower and limit the involvement of the respective financial institution to enrollment verification.
Private student loans are both similar to and different than federal student loans in a number of ways. While federal student loans have fixed interest rates, do not require a credit check for approval (since they're partially insured by the government), and have uniform rules regarding repayment issues, private student loans typically have variable rates (which makes one's monthly payments somewhat unpredictable), require an evaluation of the borrower's ability to repay amounts lent, and give the lender autonomy in raising rates or assessing penalties in the event of payment issues. Private student loans do not require repayment until after a borrower graduates either, unlike federal loans. There are also statutes of limitations that dictate the length of time during which you can be sued for private student loan debt, while federal student loans are never time-barred.
Private student loans and federal student loans are both exempt from bankruptcy protection, and missed payments for both are noted on your major credit reports.
There are two primary types of private student loans: 1) School-channel loans -- Private loans that are approved by the borrower's school, generally have lower interest rates than other student loans, and which distribute funds directly to the school; and 2) Direct-to-consumer loans -- Loans that disburse funds to the borrower and limit the involvement of the respective financial institution to enrollment verification.
Private student loans are both similar to and different than federal student loans in a number of ways. While federal student loans have fixed interest rates, do not require a credit check for approval (since they're partially insured by the government), and have uniform rules regarding repayment issues, private student loans typically have variable rates (which makes one's monthly payments somewhat unpredictable), require an evaluation of the borrower's ability to repay amounts lent, and give the lender autonomy in raising rates or assessing penalties in the event of payment issues. Private student loans do not require repayment until after a borrower graduates either, unlike federal loans. There are also statutes of limitations that dictate the length of time during which you can be sued for private student loan debt, while federal student loans are never time-barred.
Private student loans and federal student loans are both exempt from bankruptcy protection, and missed payments for both are noted on your major credit reports.
The amount a student's family is predicted to put … moreThe amount a student's family is predicted to put toward their education costs each year based on the family's size, collective income, assets, and number of members enrolled in college.
The Expected Family Contribution (ERC) is subtracted from the cost of attendance to determine a student's need for financial aid. The lower the ERC, the more likely a student is to qualify for federal student aid programs.
The Expected Family Contribution (ERC) is subtracted from the cost of attendance to determine a student's need for financial aid. The lower the ERC, the more likely a student is to qualify for federal student aid programs.
Incentive programs that allow debt from federal ed … moreIncentive programs that allow debt from federal education loans to be waived as a result of the debtor working in a certain high-need field.
Examples of jobs that would qualify for student loan forgiveness are teachers in low-income neighborhoods, teachers specializing in understaffed subject areas, social workers, and Peace Corps volunteers.
Examples of jobs that would qualify for student loan forgiveness are teachers in low-income neighborhoods, teachers specializing in understaffed subject areas, social workers, and Peace Corps volunteers.
The acronym FAFSA stands for Free Application for … moreThe acronym FAFSA stands for Free Application for Federal Student Aid. This application was developed by the office of Federal Student Aid, a subsidiary of the U.S. Department of Education, and serves as the primary gateway for students to receive most means of financial aid, whether it comes from the federal government in the form of a Pell Grant or Stafford Loan, a state program, or an institution such as a college, university, or private organization.
The FAFSA incorporates information about an applicant's financial circumstances in order to determine their level of need and, if the application is filled out online, will even retrieve an applicant's tax information directly from the Internal Revenue Service in order to simplify the process. The FAFSA does not take into account factors such as race, religion, or sexual orientation. The office of Federal Student Aid begins accepting FAFSAs January 1 of each year, and aid is dispersed on a first-come first-served basis.
The FAFSA incorporates information about an applicant's financial circumstances in order to determine their level of need and, if the application is filled out online, will even retrieve an applicant's tax information directly from the Internal Revenue Service in order to simplify the process. The FAFSA does not take into account factors such as race, religion, or sexual orientation. The office of Federal Student Aid begins accepting FAFSAs January 1 of each year, and aid is dispersed on a first-come first-served basis.
The mechanism through which the federal government … moreThe mechanism through which the federal government lends money to students and parents for educational costs after high school. While the government serves as the lender for this program, private companies act as intermediaries and service the loans.
Federal direct student loans can either be subsidized or unsubsidized, depending on the particular applicant's level of financial need. Interest rates vary depending on whether the loan is subsidized or not as well as whether it is for an undergraduate student, a graduate student, or the parents of a dependent undergraduate student.
There are a number of different repayment plans that federal direct student loan recipients can choose from, including a fixed monthly payment, a graduated plan where the monthly payment amount increases over time, and a plan where the amount of one's payment is based on their income.
Federal direct student loans can either be subsidized or unsubsidized, depending on the particular applicant's level of financial need. Interest rates vary depending on whether the loan is subsidized or not as well as whether it is for an undergraduate student, a graduate student, or the parents of a dependent undergraduate student.
There are a number of different repayment plans that federal direct student loan recipients can choose from, including a fixed monthly payment, a graduated plan where the monthly payment amount increases over time, and a plan where the amount of one's payment is based on their income.
The money you earn from taxable sources each year, … moreThe money you earn from taxable sources each year, minus above-the-line deductions.
This is the amount from which personal and dependent exemptions and either the standard deduction or itemized deductions are taken in order to determine your final tax basis. Your adjusted gross income also determines your eligibility for tax benefits.
This is the amount from which personal and dependent exemptions and either the standard deduction or itemized deductions are taken in order to determine your final tax basis. Your adjusted gross income also determines your eligibility for tax benefits.
A review of a tax return conducted by the Internal … moreA review of a tax return conducted by the Internal Revenue Service that focuses on your reported income and deductions in order to determine whether you paid the correct amount in taxes.
An audit can result in either an additional tax liability or, rarely, a tax refund.
An audit can result in either an additional tax liability or, rarely, a tax refund.
An amount that can be subtracted from your gross i … moreAn amount that can be subtracted from your gross income, thereby lowering your ultimate taxable income and your tax bill.
There are myriad types of potential deductions, some of which you can always take, and others only if you itemize your deductions, as opposed to accepting the standard deduction.
There are myriad types of potential deductions, some of which you can always take, and others only if you itemize your deductions, as opposed to accepting the standard deduction.
The forms used to file income taxes with the Inter … moreThe forms used to file income taxes with the Internal Revenue Service.
Insurance that covers the replacement value of cov … moreInsurance that covers the replacement value of covered items reimburses the insured party for the actual amount it will take to repair or replace damaged items. It is therefore usually preferable to "market-value insurance," which only provides for reimbursement up to the amount an item would fetch if sold, or "actual cash value" insurance, which depreciation from the time an item was purchased into account.
Loss of use coverage provides for the insured part … moreLoss of use coverage provides for the insured party to be reimbursed for costs incurred or earnings lost as a result of their inability to use insured property that has been damaged.
Loss of use coverage is particularly important for business owners as well as people living in areas that are under high risk for natural disasters. In the latter case, loss of use coverage may pay for hotel stays, transportation, food, and even one's mortgage.
Loss of use coverage is particularly important for business owners as well as people living in areas that are under high risk for natural disasters. In the latter case, loss of use coverage may pay for hotel stays, transportation, food, and even one's mortgage.
In the insurance world, an endorsement is an addit … moreIn the insurance world, an endorsement is an addition to a policy that changes the terms of the original policy in order to fill in a coverage gap, add additional coverage, or add new beneficiaries. Endorsements can be added upon the creation of a policy or long after it has been in effect.
Insurance policies typically offer two different t … moreInsurance policies typically offer two different types of coverage, that which protects the insured party in the event a lawsuit is brought against them for things like accidental injury (liability coverage) and that which provides for reimbursement for damage to physical property (property coverage).
It is important that homeowners and renters properly insure their personal property by taking an inventory of what they own and estimating its total value. Insurance companies generally offer different levels of coverage for personal property and may even differentiate between moveable property like clothes and electronics and special property categories like jewelry and money.
It is important that homeowners and renters properly insure their personal property by taking an inventory of what they own and estimating its total value. Insurance companies generally offer different levels of coverage for personal property and may even differentiate between moveable property like clothes and electronics and special property categories like jewelry and money.
Insurance coverage that protects you monetarily in … moreInsurance coverage that protects you monetarily in the event that someone gets accidentally injured on your property and files suit against you. Liability coverage is especially important for businesses as well as homes with pools, outdoor spas, and trampolines.
Life insurance that is paid out to a beneficiary o … moreLife insurance that is paid out to a beneficiary only if the insured party dies during a specified period, which typically lasts one to 30 years and can be renewed at set intervals.
A number of fundamental differences exist between term and permanent life insurance policies, but perhaps the biggest is the fact that term life insurance is life insurance only, while permanent life insurance includes an investing component, which accountholders can borrow against and/or use to save for retirement. Term policies tend to be cheaper than permanent policies because they lack this component. They also tend to have cheaper premiums when policyholders are young, reflecting the lower odds of death, though premiums are adjusted with each policy renewal and can become prohibitively expensive for older parties. On the contrary, permanent life insurance policies tend to be relatively more expensive early on and more affordable later in life given that the premium remains permanently fixed.
A number of fundamental differences exist between term and permanent life insurance policies, but perhaps the biggest is the fact that term life insurance is life insurance only, while permanent life insurance includes an investing component, which accountholders can borrow against and/or use to save for retirement. Term policies tend to be cheaper than permanent policies because they lack this component. They also tend to have cheaper premiums when policyholders are young, reflecting the lower odds of death, though premiums are adjusted with each policy renewal and can become prohibitively expensive for older parties. On the contrary, permanent life insurance policies tend to be relatively more expensive early on and more affordable later in life given that the premium remains permanently fixed.
Permanent life insurance that remains in effect un … morePermanent life insurance that remains in effect until the policy holder passes away and does not need periodic renewal, unlike term life insurance. It also includes an investment aspect, which entails a portion of your premium being placed into tax-deferred stocks, bonds, or money-market accounts, the proceeds of which people often use to supplement their income during retirement.
Permanent life insurance policies tend to be more expensive than term policies, at least early on, given the added investment component and the fact that premiums remain the same for the life of the policy and issuers must. Most people use permanent life insurance policies only to cover things like estate taxes, while using term policies to cover costs associated with death.
There are a number of variations of permanent life insurance, including whole life insurance, universal life insurance, and variable life insurance.
Permanent life insurance policies tend to be more expensive than term policies, at least early on, given the added investment component and the fact that premiums remain the same for the life of the policy and issuers must. Most people use permanent life insurance policies only to cover things like estate taxes, while using term policies to cover costs associated with death.
There are a number of variations of permanent life insurance, including whole life insurance, universal life insurance, and variable life insurance.
A form of permanent life insurance that incorporat … moreA form of permanent life insurance that incorporates both a death benefit and a tax-deferred cash savings component. Whole life insurance policies are unique in that they ensure a policyholder will have the same premium, interest rate, and death benefit for life. Whole life insurance policies also pay annual dividends, which can eventually be used to pay premiums.
Whole life insurance plans typically give policy holders little choice in how much they pay each month as well as how their investments are handled.
Whole life insurance plans typically give policy holders little choice in how much they pay each month as well as how their investments are handled.
A form of permanent life insurance which allocates … moreA form of permanent life insurance which allocates a portion of your premium to a tax-deferred savings account.
Universal life insurance affords policyholders a measure of flexibility in that they can choose their investments, decide how much to invest (a minimum payment is always required to fund the death benefit), and temporarily forgo paying premiums if the cash value of their associated savings account can make up the difference. In addition, policyholders can borrow money from the cash account portion in order to supplement retirement income, for example. However, it's often difficult to determine the rate of return you're getting from the savings account side of a universal life insurance policy, so it's generally a good idea to get a term life insurance policy and separately invest the money you therefore save on premiums.
Universal life insurance affords policyholders a measure of flexibility in that they can choose their investments, decide how much to invest (a minimum payment is always required to fund the death benefit), and temporarily forgo paying premiums if the cash value of their associated savings account can make up the difference. In addition, policyholders can borrow money from the cash account portion in order to supplement retirement income, for example. However, it's often difficult to determine the rate of return you're getting from the savings account side of a universal life insurance policy, so it's generally a good idea to get a term life insurance policy and separately invest the money you therefore save on premiums.
A form of permanent insurance that allows policyho … moreA form of permanent insurance that allows policyholders to invest a portion of their premiums in variety of different investment vehicles â?? including stocks, bonds, money market-accounts, and equity funds â?? rather than the typical tax-free savings account offered by universal or whole life insurance. The risks inherent with these types of investments make variable life insurance policies the least secure of the various permanent life insurance policies.
A form of auto insurance coverage that reimburses … moreA form of auto insurance coverage that reimburses the insured party for medical expenses, lost wages, and other expenses incurred as a result of an accident. Personal injury protection is a type of "no-fault" coverage, as it is provided no matter who was at fault.
Personal injury protection (PIP) is required in 15 states. It is not available in all states, and in many states medical payments insurance (MedPay), which provides similar coverage, is offered instead.
Learn more about personal injury protection insurance.
Personal injury protection (PIP) is required in 15 states. It is not available in all states, and in many states medical payments insurance (MedPay), which provides similar coverage, is offered instead.
Learn more about personal injury protection insurance.
Coverage for damage to your own car caused by an a … moreCoverage for damage to your own car caused by an accident. This insurance will pay for repairs to your own car if your are at fault for an accident or if you're not able to get coverage from the at-fault driver's insurance. In most cases, collision insurance has a deductible.
Collision coverage is not required by law, but it will be required by your lender or leasing company if you finance the purchase of a car.
Read more about collision insurance coverage.
Collision coverage is not required by law, but it will be required by your lender or leasing company if you finance the purchase of a car.
Read more about collision insurance coverage.
As is the case with credit cards, international us … moreAs is the case with credit cards, international use of a debit card may trigger a special fee. The structure and amount of the fee depend on the bank and the nature of the transaction. For example, if the debit card is used to withdraw money from an ATM, several different fees might be layered together. (See Foreign ATM Fee.) If the debit card is used to make a point-of-sale payment, such as at a store, hotel, or restaurant, the fee will resemble a credit card foreign transaction fee, and may amount to about 1% to 3% of the transaction.
Many banks charge a special fee for ATM transactio … moreMany banks charge a special fee for ATM transactions made outside the U.S., just as they do for foreign debit card transactions. The rationale given is that the fees cover the costs of currency conversion and mitigate the increased risk of fraud that comes with international use of an ATM or debit card.
The amount of the foreign ATM fee can be structured in several ways, and depends not only on the policies of the bank issuing the ATM/debit card, but also on the terms of the bank that owns the ATM. For example, the bank issuing the ATM/debit card may charge a flat fee of $1 to $5 for each transaction, plus a percentage, typically 1% to 3%, of the amount withdrawn from the ATM. Some banks charge only one of those fees, but many charge both. In addition to that, the foreign bank may also charge a fee for the use of its ATM.
The amount of the foreign ATM fee can be structured in several ways, and depends not only on the policies of the bank issuing the ATM/debit card, but also on the terms of the bank that owns the ATM. For example, the bank issuing the ATM/debit card may charge a flat fee of $1 to $5 for each transaction, plus a percentage, typically 1% to 3%, of the amount withdrawn from the ATM. Some banks charge only one of those fees, but many charge both. In addition to that, the foreign bank may also charge a fee for the use of its ATM.
In addition to the one-time overdraft fee that ban … moreIn addition to the one-time overdraft fee that banks charge when a customer withdraws more money than his checking account holds, many banks also charge extended overdraft fees -- also known as negative account balance fees. This fee is assessed on a periodic basis (i.e. $5 every 2 days), though the timing of it first being charged varies from bank to bank. For example, some banks first impose the fee after the account has been overdrawn for five days.. It's therefore a good idea to check your account's Fee Schedule to determine how your bank handles extended overdrafts.
An overdraft occurs when a bank customer makes an … moreAn overdraft occurs when a bank customer makes an ATM withdrawal, a debit purchase, or an electronic payment (automated payments are included), or writes a check for an amount that is greater than what the checking account holds. If the bank chooses to honor the payment even though the account lacks sufficient funds, an overdraft fee is charged to the account holder. This fee varies, depending on the terms of the checking account, but is typically in the range of $25 to $35. Many banks offer several types of overdraft protection to help avoid this fee.
Banks and other services that provide financial st … moreBanks and other services that provide financial statements have increasingly begun to charge a fee to provide paper statements to customers. The fee is typically $ 2per statement, and can be avoided when customers opt to receive statements electronically instead. Reducing the use of paper statements provides an environmental benefit and a substantial cost savings to the institutions that provide them.
Optional damage coverage available while renting a … moreOptional damage coverage available while renting a vehicle. In case of damage, theft or loss of use of the car, the insured is not responsible to pay the cost of the full repair. A collision damage waiver is not technically insurance, rather a waiver against being charged the full amount of any damage to or loss of a vehicle.
Learn more about collision damage waivers and insurance for rental cars.
Learn more about collision damage waivers and insurance for rental cars.
In the context of auto rentals, personal accident … moreIn the context of auto rentals, personal accident insurance covers the driver and all passengers for loss of life, injury and ambulance expenses. It can be purchased directly from an auto rental company, or it might come as part of the auto rental insurance provided by your credit card.
Learn more about insurance for rental cars.
Learn more about insurance for rental cars.
As it pertains to auto rental insurance, personal … moreAs it pertains to auto rental insurance, personal effects protection covers lost, stolen or damaged items owned by the renter and his or her immediate family. It typically comes as part of an insurance package purchased from the auto rental company or via the auto rental insurance coverage provided by your credit card.
Learn more about insurance for rental cars.
Learn more about insurance for rental cars.
A policy that pays the fees for a rental vehicle w … moreA policy that pays the fees for a rental vehicle while the insured vehicle is in the shop for repairs that are covered by insurance. Coverage is limited, usually for a maximum daily rate up to a certain number of days.
A brokerage account in which an investor uses secu … moreA brokerage account in which an investor uses securities and cash holding as collateral for a loan from their broker. The borrowed money is then used to increase the size of your investment beyond your liquid spending power in order to magnify the potential profits.
The funds lent to an investor in a margin account accrue interest at a 3% - 8% rate until it is repaid. And, if the combined value of your securities and cash position falls too low, your broker may require to repay some of your debt in whatâ??s known as a â??margin call.â??
The funds lent to an investor in a margin account accrue interest at a 3% - 8% rate until it is repaid. And, if the combined value of your securities and cash position falls too low, your broker may require to repay some of your debt in whatâ??s known as a â??margin call.â??
An Exchange Traded Fund (ETF) is an automated inde … moreAn Exchange Traded Fund (ETF) is an automated index funds designed to mimic the performance of a certain segment of the market. For example, there are ETFs that track the S&P 500, those that provide exposure to a particular sector â?? such as retail or energy, and those that focus on companies of a certain size.
An estimate of the current market value of a car g … moreAn estimate of the current market value of a car given its age, condition, options and mileage.
The actual cash value is based the transaction prices of recent local sales of similar vehicles. References such as the NADA Guides and Kelley Blue Book can be used to determine actual cash value.
The actual cash value is based the transaction prices of recent local sales of similar vehicles. References such as the NADA Guides and Kelley Blue Book can be used to determine actual cash value.
One party assuming the legal rights of another par … moreOne party assuming the legal rights of another party to collect a debt or damages.
Insurance companies use subrogration to recover funds from another individual or insurer that you or your insurance company have already paid. One common example of this is when your own insurer pays a claim before fault has been determined in an auto accident. Insurance companies also use subrogation when the insurer who pays out for a claim is not the primary source of insurance for that loss.
Learn more about subrogation.
Insurance companies use subrogration to recover funds from another individual or insurer that you or your insurance company have already paid. One common example of this is when your own insurer pays a claim before fault has been determined in an auto accident. Insurance companies also use subrogation when the insurer who pays out for a claim is not the primary source of insurance for that loss.
Learn more about subrogation.
Coverage for automobile damage due to theft, vanda … moreCoverage for automobile damage due to theft, vandalism, falling objects, flood, fire, animals, or natural disasters.
You are not required to carry comprehensive coverage unless you have a car loan or lease. In that case, your lender or leasing company will probably require you to carry comprehensive insurance.
Learn more about comprehensive insurance coverage.
You are not required to carry comprehensive coverage unless you have a car loan or lease. In that case, your lender or leasing company will probably require you to carry comprehensive insurance.
Learn more about comprehensive insurance coverage.
VIN:
A unique 17-character code that identifies motor v … moreA unique 17-character code that identifies motor vehicles, towed vehicles, motorcycles, scooters and mopeds.
VIN is an abbreviation for vehicle identification number. It can be viewed by looking through the windshield at the dashboard on the driver's side of the car.
VIN is an abbreviation for vehicle identification number. It can be viewed by looking through the windshield at the dashboard on the driver's side of the car.
A special motor vehicle title for a car that has p … moreA special motor vehicle title for a car that has previously been written off as a total loss by a car insurance company.
In some states, this may be called a "branded title" or a "salvage certificate." In general, an inspection or other proof of repairs is necessary to get license plates for a car with a salvage title.
In some states, this may be called a "branded title" or a "salvage certificate." In general, an inspection or other proof of repairs is necessary to get license plates for a car with a salvage title.
Insurance to cover injuries to other people and da … moreInsurance to cover injuries to other people and damage to their property when you are at fault for a car accident.
Liability insurance policies have two types of coverage: 1) bodily injury liability insurance covers expenses related to physical injuries suffered by other people, and 2) personal property liability insurance covers damage to cars and other property damaged in an accident such as a fence or building.
Learn more about liability car insurance.
Liability insurance policies have two types of coverage: 1) bodily injury liability insurance covers expenses related to physical injuries suffered by other people, and 2) personal property liability insurance covers damage to cars and other property damaged in an accident such as a fence or building.
Learn more about liability car insurance.
Insurance that covers another person's injuries in … moreInsurance that covers another person's injuries in a car accident when you are at fault.
This coverage is one aspect of auto liability insurance, and it covers medical expenses, legal fees, loss of income, pain and suffering, and funeral costs.
Learn more about bodily injury liability coverage.
This coverage is one aspect of auto liability insurance, and it covers medical expenses, legal fees, loss of income, pain and suffering, and funeral costs.
Learn more about bodily injury liability coverage.
Insurance that pays for damage to another person's … moreInsurance that pays for damage to another person's car or other property when you are at fault for an accident.
Property damage liability insurance is a component of auto liability insurance. It does not cover damage to your own car.
Learn more about property damage liability coverage.
Property damage liability insurance is a component of auto liability insurance. It does not cover damage to your own car.
Learn more about property damage liability coverage.
Insurance to cover your expenses after an accident … moreInsurance to cover your expenses after an accident caused by a driver who either has no insurance or insufficient insurance to cover all of your damages.
This coverage is required in about half of the states. Learn more about uninsured/underinsured motorist insurance.
This coverage is required in about half of the states. Learn more about uninsured/underinsured motorist insurance.
There is no official definition for "full coverage … moreThere is no official definition for "full coverage" car insurance.
Many people use this term to mean the combination of liability, collision and comprehensive insurance. Another common definition is all the types of coverage that are required by law, which varies from state to state, plus collision and comprehensive insurance required by the lender on a car loan or lease.
Read more to learn how to make sure you are fully covered.
Many people use this term to mean the combination of liability, collision and comprehensive insurance. Another common definition is all the types of coverage that are required by law, which varies from state to state, plus collision and comprehensive insurance required by the lender on a car loan or lease.
Read more to learn how to make sure you are fully covered.
A vehicle with has sufficient damage for the insur … moreA vehicle with has sufficient damage for the insurer to consider it as a "total loss."
This means that rather than paying to repair the damage to the vehicle, you will get a cash payment from the insurer for the car's actual cash value minus any deductibles.
Learn more about totaled cars.
This means that rather than paying to repair the damage to the vehicle, you will get a cash payment from the insurer for the car's actual cash value minus any deductibles.
Learn more about totaled cars.
The person or people listed on an insurance policy … moreThe person or people listed on an insurance policy declarations page.
The named insured is explicitly covered by the insurance and has the legal rights and obligations under that policy. For example, only someone listed as named insured can make changes to the insurance policy.
The named insured is explicitly covered by the insurance and has the legal rights and obligations under that policy. For example, only someone listed as named insured can make changes to the insurance policy.
Insurance that covers the difference between the a … moreInsurance that covers the difference between the actual cash value of a vehicle and the amount owed on an auto loan or lease.
If a car owner is "upside down" on the vehicle's financing, gap insurance provides additional coverage so that the car loan can be paid off if the car is declared a total loss after an accident.
Learn more about gap insurance.
If a car owner is "upside down" on the vehicle's financing, gap insurance provides additional coverage so that the car loan can be paid off if the car is declared a total loss after an accident.
Learn more about gap insurance.
Insurance that covers medical injuries when you, y … moreInsurance that covers medical injuries when you, your passengers or members of your household are injured in a car accident.
Even if you have other coverage for your injuries from a health insurance plan, medical payments insurance can pay the copays, coinsurance and deductibles of other forms of insurance.
Learn more about medical payments coverage.
Even if you have other coverage for your injuries from a health insurance plan, medical payments insurance can pay the copays, coinsurance and deductibles of other forms of insurance.
Learn more about medical payments coverage.
Tweleve states have "no fault" auto insurance laws … moreTweleve states have "no fault" auto insurance laws that require drivers to carry insurance to cover their own personal injuries suffered in an accident, regardless of fault.
Personal injury protection (PIP) insurance provides this coverage. Therefore, PIP insurance is sometimes referred to as "no fault" insurance.
Read more about no fault insurance states.
Personal injury protection (PIP) insurance provides this coverage. Therefore, PIP insurance is sometimes referred to as "no fault" insurance.
Read more about no fault insurance states.
A "certificate of financial responsibility" filed … moreA "certificate of financial responsibility" filed with the state by an insurance company to verify that a driver has a car insurance policy that satisfies the state minimum levels of coverage.
An SR-22 is typically required after a serious traffic violation or driver's license suspension.
Learn more about SR-22 certificates of responsibility.
An SR-22 is typically required after a serious traffic violation or driver's license suspension.
Learn more about SR-22 certificates of responsibility.
Car insurance you carry to cover the losses suffer … moreCar insurance you carry to cover the losses suffered by other people. Liability auto insurance is third party coverage.
A three-part test that courts use to determine whe … moreA three-part test that courts use to determine whether a debtor deserves to have his or her student loans discharged in bankruptcy on the basis that repayment would impose an â??undue hardshipâ?? on the debtor and his or her dependents.
If your insurance company declares your car to be … moreIf your insurance company declares your car to be a total loss, you are permitted to keep the car, but the insurer will deduct its salvage value -- what they would have gotten selling the car to a junkyard -- from any benefit they pay you.
The first page (or pages) of an insurance policy t … moreThe first page (or pages) of an insurance policy that defines who is covered, what losses are covered, the term of the policy and other important information about the insurance coverage being provided.