Financial Terms Explained

Find the meaning of popular financial terms you hear and read.

Payment of a debt in regular, periodic installments of principal and interest as opposed to interest only payments.

Amortization Schedule
A timetable for payment of a loan showing the amount of each payment applied to interest and principal and the remaining balance.

Annual Percentage Rate (APR)
The periodic rate, expressed as an annual amount, used to compute the finance charge on an outstanding balance.

Annual Percentage Yield (APY)
A percentage rate that reflects the total amount of dividends paid on a deposit account (e.g., checking, savings, Certificates, or IRAs). It is based on the dividend rate earned on your account and the frequency of compounding for a 365-day period.

Authorization (Credit or Debit Card)
The approval by the credit card issuer for a merchant or another affiliate to complete a credit/debit card transaction.

Automated Clearing House (ACH)
A nationwide electronic funds transfer system that provides for inter-bank clearing of electronic transactions (i.e., money is moved electronically between financial institutions). Some examples of ACH transactions are Direct Deposit of payroll, Social Security and tax refunds, and direct payment of mortgages and utility bills.

Available Balance
This is the amount of money in the account that is available for withdrawal. It reflects the latest balance based on transactions posted to the account, including deposited funds, paid checks, withdrawals, and purchases made with a Mastercard® Debit Card. Please note that some transaction activity (such as outstanding checks and some debit card purchases) may take several days to post to the account and, therefore, may not be reflected in the available balance. Some deposits made in a branch or at an ATM may not be immediately available for withdrawal or to cover other transactions.

Available Credit
The amount of unused credit that is available on your line of credit account. Available credit is calculated by subtracting the outstanding balance from your total credit line.

Average Daily Balance
The daily ending balance divided by the number of days in the statement cycle.

Balance Transfer
Allows you to use the available credit on one credit card and pay off another, ideally with a lower cost.

Bill Pay
An Online Banking service that offers the convenience and control of managing and paying bills online. With Bill Pay, you can pay any company or individual in the U.S., schedule one-time, recurring payments and choose to receive electronic bills (eBills) from selected billers.

Billing Cycle
The number of days in the billing period. It includes the day after the previous close date through the current closing date of the account.

Cancelled Check
A check that was written by a member and that the credit union has paid, charged to the member’s account, and then endorsed. Once cancelled, a check is no longer negotiable.

Cashier's Check or Certified Funds
A check drawn on and issued by the credit union from a member’s account. A cashier's check or certified funds check, can be used instead of a personal check to guarantee that funds are available for payment.

A written order you have authorized instructing the credit union to pay a specific person or entity a specified amount of money from your account.

Checking Account
An account that allows you to deposit and withdraw money, make point-of-sale purchases, and write checks.

Compound Dividends
When dividends are paid not only on your deposits, but also on the dividends that have been paid on your account.

Convenience Check
A convenience check works like a personal check except the amount is charged to your credit card account. This check can be written to your choice of recipients and for any amount up to your available credit limit.

Courtesy Pay
South Carolina Federal’s non-contractual courtesy that may pay items from a checking account when funds are not available. Any available predetermined overdraft sources will be used prior to Courtesy Pay. This courtesy is available for members 18 years of age and older with an account in good standing.

A deposit of cash or checks made to your account that increases your available balance.

Credit Card Balance
An outstanding amount of money. A checking or savings account balance refers to the amount of money available in a particular account. A credit card balance refers to the amount owed.

Any item that reduces the balance in your member account. A check, ATM withdrawal, and Mastercard® Debit Card purchase are all examples of debits.

Debit Card
A card issued by the credit union for making purchases; either by Personal Identification Number (PIN) or by signing for your purchases everywhere Mastercard® Debit Cards are accepted. You can also use it to access cash at ATMs. The amount of your purchases or cash withdrawals is deducted from your checking or savings account balance.

To put money into your account. You can do this many different ways including:

  • Night Deposit
  • At any South Carolina Federal financial center
  • Wire transfer
  • Mobile deposit

Direct Deposit
Direct Deposit is a free service that automatically deposits your recurring income received into any checking or savings account that you choose. Income received from your employer, Social Security, pension and retirement plans, the Armed Forces, VA Benefits, and annuity or dividend payments may all qualify for Direct Deposit.

Payments made by the credit union to its members. Dividends are paid to members on a monthly or quarterly basis.

EBills are electronic versions of your paper bills that you can receive through Payment Manager within Online Banking. An eBill comes directly from the biller. In addition, a notification that you have received an eBill in Payment Manager can be sent automatically to your email address. You can view balances, transactions and other statement information in an eBill. Then you can pay it and print it – all online.

Finance Charge
Also known as interest, the finance charge is the fee for borrowing money. Finance charges may be imposed when you do not pay off your outstanding balance in full.

First Mortgage
A real estate loan that has priority over any subsequently recorded mortgages.

Grace Period
The period between the date of the credit card billing statement and the date payment in full must be received before interest begins to accrue on new purchases. It is also the time period after maturity that we allow certificate changes without penalty. Current grace period is set at 10 calendar days.

Home Equity Line of Credit (HELOC)
A revolving line of credit or loan based on the equity in the mortgagor's house. The property is the security for the loan, which is usable for any purpose.

A fixed charge for borrowing money, usually a percentage of the amount borrowed.

Joint Account
A joint account is an account owned by two or more persons.

Late Payment Fee
The charge or fee that may be imposed if the Minimum Monthly Payment is not received by the Payment Due Date.

Minimum Balance
A specific amount of money that the credit union requires to open or maintain a particular account, or avoid a service fee.

Minimum Monthly Payment
The minimum dollar amount that must be paid each month to prevent a credit card account from being delinquent. The minimum amount is based on the percentage of 2.5% of your Outstanding Balance.

National Credit Union Administration (NCUA)
The National Credit Union Administration (NCUA) is the independent federal agency that charters and supervises federal credit unions. NCUA, backed by the full faith and credit of the U.S. government, operates the National Credit Union Share Insurance Fund (NCUSIF) insuring the savings of 80 million account holders in all federal credit unions and many state-chartered credit unions.

Non-sufficient Funds (NSF)
A term used to indicate when an item such as a check, or other transaction presented for payment is returned unpaid because the available balance in your deposit account is less than the amount of the item. Also called "Returned item" or "bounced check." A Returned Item fee will apply.

Official Check
An official check is a check payable to a third party issued by the credit union.

Online Banking
A service that allows you to handle most banking activities from your computer via the Internet. Banking activities such as monitoring account activity, transferring funds, paying bills, etc., can be done quickly, easily, and safely.

Overdraft Protection
A service offered by the credit union in which savings or credit accounts (such as a Personal Access Line of Credit) are linked to your checking account for the purpose of transferring or advancing sufficient funds to cover items when the available balance in your checking account is less than the amount necessary to cover the items.

Payment Due Date
The date when your payment must reach the credit union to avoid a late payment fee (if applicable).

Personal Identification Number (PIN)
A secret combination of letters or numbers you use to gain access to your account through an electronic device such as an ATM.

Point-Of-Sale (POS)
A merchant transaction (purchase or return) made through a store, telephone, or internet using Mastercard® Debit Card for PIN or signature-based purchases.

Private Mortgage Insurance (PMI)
Insurance written by a private company that protects the lender from losses in the event the borrower defaults on the mortgage. Borrowers are required to pay the premium for private mortgage insurance. Private mortgage insurance limits a lender's exposure to financial loss resulting from loan default. If you make a down payment of less than 20%, even if you have a good credit profile, lenders generally require private mortgage insurance.

Remote Deposit
A secure, convenient way of depositing checks into your account with the South Carolina Federal iPhone™ and Android™ smartphone applications.

Routing Number (also known as Transit or ABA Number)

The nine-digit number on the bottom left hand corner of your checks. The first set of numbers to the left of your account number. The routing number identifies the financial institution that issued the check. Every bank or credit union in the United States has at least one routing number. (SC Federal routing number: 253278401)

Roth IRA
A type of IRA that allows individuals, subject to certain income limits, to set aside money each year to grow tax-deferred. Contributions may be withdrawn tax-free at any time. Earnings may be withdrawn tax-free if certain conditions are met, otherwise taxes and penalties may apply.

Savings Account
An NCUA-insured deposit account that earns dividends. Unlimited withdrawals are permitted in person and at the ATM. Other withdrawals are subject to limits. Fees may apply.

Second Mortgage
A mortgage that is subordinate to the rights of the first mortgage holder.

Share Certificate
An NCUA-insured deposit account where you agree to keep the money on deposit for a specified period of time, usually anywhere from three months to several years. In exchange, the dividends paid is usually higher than the rate paid on savings accounts. Accounts with higher balances and longer terms may earn higher rates. Funds withdrawn prior to "maturity" are subject to an early withdrawal penalty. You can elect to let accrued dividends compound in the account or have it paid to you monthly or quarterly.

Simple Interest
Interest that is paid on the principal amount borrowed. It is considered the best type of interest for a borrower because it is not compounded.

Stop Payment
When you ask the credit union to not pay a particular check/transaction that you have written or authorized on your account. A Stop Payment fee will apply.

Statement Cycle
A period of time for which activity on your account is reported on your statement. There is a start and end date for each statement cycle. Cycles may be monthly or quarterly depending on the type of account and activity.

Traditional IRA
A retirement account that allows individuals to set aside money each year. Contributions may be tax deductible and earnings grow tax-deferred. Deductible contributions and earnings are taxed when withdrawn, typically at retirement. A 10% IRS penalty may apply for pre-mature withdrawals.

Variable Rate
An interest rate that can change on a periodic basis, or when certain conditions are met.

Wire Transfer
A wire transfer system that enables you to move money between financial institutions anywhere in the U.S. and throughout the world. Wire transfers can be performed through Bank to Bank and Western Union®. See wire transfer fees here.

To take money out of your account. You can do this many different ways including:

  • Writing a check.
  • Mastercard®Debit Card purchase - use your debit card to make a purchase anywhere. Mastercard® Debit Cards are accepted including, gas stations, grocery stores, and online.
  • ATM withdrawals - get cash at ATMs worldwide.
  • At any South Carolina Federal branch location.