Financial Literacy Terms Flashcards
Definitions
Fixed expense
Expenses that are typically due at the same time each month and are predictable amounts.
Flexible expense
Expenses that are paid at different times each month and vary in the amount from month to month.
Regular expense
Expenses that occur on a predictable and frequent basis, such as weekly or monthly. They can be fixed.
Irregular expense
Expenses that are not expected or occur infrequently.
Basic expense
Things we spend money on because we need them.
Discretionary expense
Things that we spend money on because we want them.
Loans
When you borrow money from a financial institution.
Mortgage
Money you owe on a home you own.
Credit Card
You borrow money from a bank to make purchases and pay bills, then pay it back monthly with interest.
Balance
The amount to be paid on a loan.
Principal
The total amount which is borrowed and on which interest is calculated.
Collateral
Something of value that is pledged as security on a loan.
Secured loan
A loan guaranteed by collateral (e..g, mortgage secured by your house) - lower rates
Unsecured loan
Credit Cards - Higher rates - No collateral
Line of credit
Lets you borrow money up to a set amount
Credit Bureau
A company that stores and distributes credit information. E.g Equifax
Credit score
Shows how reliable you are with credit, credit reports predict how well you will manage loans and other payments.
Co-signer
Someone who will make a payment if you don’t.
Fixed interest rate
Stays the same for the duration of the loan.
Variable interest rate
Is typically prime +/- a percentage. As banks change prime, your rate changes
Prime
Lowest interest rate that banks charge monthly
Loan shark
Someone who lends money, who charges high interest rates.
Bankruptcy
A legal procedure filed in federal bankruptcy court that allows an individual that is unable to pay its debt when due to reduce, reorganize or cancel those debts.
Cash advance
Using your card like a debit card, no interest free period and has a fee
APR
Interest rate is the price you pay for borrowing money. (Annual Percentage Rate)
Bank interest
How much banks give you for having money in an account at the bank.
Purchase protection
Is free benefit on many credit cards for stolen, lost or damaged.
Cyberbanking
Banking through online services. Allows you to transfer money, check balances, pay bills, etc.
Chequing account
Used to pay bills, do money transfers, debit transactions, and write cheques. Many are free if you are a student.
Savings account
Money is meant to stay in account and earn interest. Usually you have to pay a monthly fee if your minimum balance is not high enough.
Debit card
Money is meant to stay in account and earn interest. Usually you have to pay a monthly fee if your minimum balance is not high enough. Electronic link to your chequing or savings account. Money is exchanged instantly.
Direct deposit
Earnings, or government payments, that are automatically deposited into bank accounts, saving time, money and effort.
Automatic payment
This is when you set up to have a bill paid directly out of your bank account at the same time each month. Can be charged with NSF if not enough money in account.
Paypass
Tap (Contactless Payment)
Grace period
Interest free period to pay off last month’s purchases
Minimum payment
Smallest amount you pay on your credit card each month.
Term
The amount of time it will take you to pay off a loan.
Credit limit
The maximum amount of money you can borrow or spend on a credit card.
Hard inquiry
When a money lender asks to look at your credit review when applying for a loan.
Late fee
Additional charge if you don’t pay minimum balance in time.
NSF
Insufficient funds
Over the limit fee
Charge if you spend more than your monthly limit.
OSAP
Stands for Ontario Student Assistance Program. A mix of grants and loans based on your specific financial needs.
Bursary
Bursaries are financial-need based awards that do not have to be repaid with money.
Scholarship
They are merit based and are awarded for academic achievement, sports achievement, or volunteerism.
GIC
Receive a fixed amount of interest for a fixed amount of money for a fixed amount of time.
Bonds
A bond is an “IOU”, certifying that you loaned money to a government or corporation and outlining the terms of repayment.
Canada savings bond
Safest type of bond. Backed by the Government of Canada
Corporate bond
Sold by private companies to raise money. If a company goes bankrupt bondholders have first claim to assets before stockholders but still may not get full money back.
Stocks
Represent ownership in a corporation. Stockholders own a share of the company and are entitled to a share of the profits.
Mutual funds
Professionally managed portfolios made up of stocks, bonds and other investments.
Balanced fund
Includes a broad mix of stocks and bonds.
Growth fund
Emphasizes companies that are expected to increase in value. Has high risk buy may give great return.
Specialized fund
Invests in stocks and bonds of companies in a specific industry (e.g., technology, health care)
Tax-free savings account
Save and invest money without paying taxes on interest.
