APY? NCUA?  Learn the banking lingo!

APR – Annual Percentage Rate
The annual cost of borrowing money expressed as a percentage.

APY – Annual Percentage Yield
Simply, it’s the percentage rate of interest that you earn for keeping your money in an account for one year. It’s normally a little higher than the interest rate (dividend rate) because interest has been added to the account periodically as indicated by the “dividend period” in the account disclosure. Once the interest earned is placed in the account at the end of the dividend period, the funds become part of the principle balance that is earning money during the next dividend period. Therefore, prior interest increases the account balance and earns additional interest, hence ‘yielding’ more. This process, called compounding interest, is why interest rates need to be quoted as percentage yields.

ATM – Automated Teller Machine
An electronic device that makes cash available with the use of an ATM, credit, or debit card. In some cases, deposits and transfers can be transacted at these machines instead of visiting a teller at a financial institution. They are normally available for use 24 hours a day 7 days a week.

A financial institution that receives and lends money. Most banks are owned by stockholders and offer varied products and services which are open to any consumer. While offering similar products and services, banks differ from credit unions that are “member-owned” and often have specific fields of membership.

Share Certificate of Deposit (CD)
A type of savings account in which the funds are locked into the account for a specified period of time. Normally, since the funds are guaranteed to be in the account for a specific period of time, the account pays a higher rate of interest because the financial institution knows they can use that money for the specified period of time.

Check 21
A federal law that started on October 28, 2004, the affected check clearing rules. The law allows financial institutions to use electronic image capturing and transmission technology to improve the check collection process. The process will produce an electronic check for processing versus a paper check for clearing, called a substitute check. What does that mean to you? It means the Credit Union is required to accept substitute checks and the time it used to take to clear a check will be drastically reduced. For instance, you write and mail your normal mortgage payment on the last payroll Friday of the month.  It used to take about 7 to 10 days or so for the money to come out of your account. Now you mail that check on Friday and the funds could be deducted from your account as early as Tuesday or Wednesday, depending on your financial institution. This is one example. Depending on your circumstances, the timing may be different. As always, we recommend that you have the funds available in your account BEFORE you write a check.

Checking / Share Draft Account
An account in which drafts (checks) can be written to transact financial business. It is safer than carrying cash and shows documentation of payment.

Club Account
A savings account designed for a specific purpose. For instance, a Holiday Club is a savings account that is only accessible right before the holidays thus allowing you to save from the time it is opened until October 1st. The Credit Union offers three club account types: Personal, Holiday, and Vacation Clubs. There are no withdrawal restrictions on Vacation or Personal

Club Accounts. Holiday Club Accounts incur at $10 fee for each withdrawal during the year.

An item of tangible value offered to a financial institution to secure a loan. For example, an automobile or home often serve as loan collateral.

Courtesy Pay
Courtesy Pay is a service that adds a measure of protection to your Share Draft account. Courtesy Pay may cover transactions and withdraws when your available account balance is negative, up to your approved limit, for a $25.00 fee per covered overdraft transaction. The $25 fee will be assessed for each item that draws your available balance negative. Note: An “Overdraft” occurs when the amount of the share draft(s) or payment(s) exceeds the available balance in your Share Draft account. Overdrafts, up to a limit of $500 [including the amount of the overdrawn item(s) and the Courtesy Pay fee(s)], may be honored by Baltimore County Employees Federal Credit Union. You then have up to 30 days to bring the account current, either through a direct deposit, transfer of funds, or a deposit at one of our branch offices.

Credit Card
A plastic device used to easily borrow money to finance purchases. Many credit cards have buyer protection benefits, as well as security features not available with a checking account. Please contact a Member Service Representative for more details.

Credit Rewards
A program exclusive to the Credit Union. This program allows members who apply for a loan to receive a rate consistent with their credit history. Rates are based on approved credit and members with sound credit earn our very best rates, while members with past credit issues will be eligible for a rate consistent with their credit histories and possibly a rate reduction in the future based on improved credit history. Contact a Loan Counselor for additional details.

Credit Score / Beacon Score
Empirical mathematical equation created to calculate the probability of repayment of a debt. In other words, how you have paid your bills translated into a number that companies use to predict if you will pay future bills. The score is based on how one has managed their current and past debts, their amount of debt, the number of companies asking about the current debts, etc.

Credit Union
A nonprofit financial cooperative that is owned and run by people who have a common bond, such as the same employer, place of worship, or geographic location. Membership is limited to those who are part of (or related to someone within) that common bond. Credit unions differ from stockholder-owned banks but offer many similar products and services.

Custodial Account
An account set up for the benefit of another. This account requires the funds in the account be used solely for the benefit of the named party. The named party does not have access to the funds but the funds are to be used for their benefit.

Debit Card
A plastic device used by members to access their account at ATMs or to make purchases from participating merchants. One of the most convenient forms of payment, it gives a record of the transaction and offers some buyer protection benefits.

Debit Card Overdraft Services
Overdraft protection for the VISA Debit Card is now available. Under this protection plan, members authorize the Credit Union to pay overdrafts for ATM and everyday debit card transactions for a fee of $25 per overdraft. Without this overdraft protection, ATM and everyday debit transactions may be declined if a member makes a withdrawal with insufficient funds.

A written order to pay a sum of money, better known as a check.

Financial Institution
A business entity that holds accounts belonging to customers. Accounts include savings, checking, and securities brokerages. Credit Unions and banks are types of financial institutions.

Home Equity Loan
A loan secured by the home in which you own and permanently reside. This type of loan uses the value of the property minus the amount owed on the first mortgage. The Credit Union uses 85% of the appraised value minus your first mortgage. The rest is equity and can be used to obtain a loan. To calculate equity, take the probable appraised value of the home multiplied by .85. That number minus the first mortgage equals the amount available for a home equity loan. This is an excellent way to finance home improvement projects and it is possible the interest paid on this type of loan is tax deductible. (Your tax advisor can give you more information about that part.) Contact a Loan Counselor for qualifying details.

IRA – Individual Retirement Account
A savings account set up specifically for use during retirement years. Contributing and withdrawing from an IRA has conditions based on income, age, and other financial factors. There are currently two types of IRA accounts: Traditional and Roth. 

Money paid for the use of money. A credit card company will charge you interest for borrowing their money and paying it back later. A credit union will pay you interest for placing your money in a savings account so they can lend it to other members in need of a loan. They will pay you interest (called a dividend) in exchange for allowing them to use your money while it’s in your account (Your funds are always available to you).

Joint Account
An account in which two or more parties have an undivided interest in the whole account.

An arrangement to borrow money with interest. There are two types of loans, secured and unsecured. Secured means that collateral (something of tangible value) is pledged until the loan is paid. Unsecured is a loan that does not offer collateral.

NCUA – National Credit Union Administration
The government agency entrusted to regulate the nation’s credit unions. In addition, NCUA provides deposit insurance on members’ accounts. Please note, since the inception of credit unions in the United States of America, not one credit union member has lost money they had saved in a federally insured credit union.

Payable on Death Account
An account in which the funds remain in the original members (owner’s) name and benefit until the time of their death. Upon their death, the funds shall pass to the named beneficiary. The beneficiary then has legal ownership of the funds.

Personal Club/ Escrow Account
A special savings account designed to keep funds separate from your regular savings account. Most members use this account to save for upcoming expenses, such as automobile insurance, tuition, camps for kids, home improvement, etc.

PIN – Personal Identification Number
A four-digit code which allows ATM access through your ATM, debit, or credit card. It is very important that this number be kept secure. Access to this code allows access to your personal finances at your financial institution.

Point Of Sale (POS) Transaction
A method of purchasing goods and services using the debit card and your personal identification number (PIN).

Power of Attorney
Legal written authority to act on another person’s behalf while they are alive.

Roth IRA
An IRA created by the Taxpayer Relief Act of 1997. This type of IRA does not allow a tax deduction for deposits made to the account. However, the money in your Roth IRA, including any interest earned, are tax free at the time of withdrawal, provided you adhere to the rules and regulations of the Roth IRA. Please contact a Member Services Representative for more information.

Savings Account
An account established to save money for future use.

Share Account
A savings account in a credit union. It includes a member’s single share in the ownership of the Credit Union.

Substitute check
An electronic copy of a check that is transmitted for payment instead of the paper check originally presented for payment.

Teen Checking Account
A checking account exclusively designed and available for our 13- to 17-year-old members. This account gives our teen members the financial freedom of being responsible for their own money while under the tutorage of their guardian/parent and the Credit Union. This account comes with the convenience of the VISA Debit Card, the QuickTeller phone and online access, and free overdraft protection, along with other great features.

Traditional IRA
An IRA in which deposits may be tax deductible during the year in which you make the deposit (contribution). Deposits grow tax free until the funds are withdrawn from the account. Taxes need to be paid on the funds, and any interest accrued, at the time of the withdrawal. The philosophy is that your income will be lower during your retirement years than it is during your earning years, thus, deferring the tax payment until you are in a lower tax bracket. Please contact a Member Services Representative for more information.