Credit, debt and bankruptcy have a unique set of terms.

The world of finance, with credit cards, interest rates and annual percentage rates, is replete with terms that many people many not know well. In this second part of our article outlining these terms, we will continue our glossary of words that you should know if you are going to engage in any financial transactions.

Delinquency - Not a juvenile offender, but a failure to pay bills when due. Failure to pay, especially if the failure lasts longer than 30 days, will usually be indicated on a credit report, which notes 30, 60, 90 and 120 day delinquencies.

Fixed Interest Rate - An interest rate that does not change over the duration of the loan or repayment period. As opposed to a Variable Interest Rate, which can change over time.

Grace Period - The length of time offered by some (and increasingly few) credit card companies that falls between the time the purchase is made and the time the payment is due. Grace periods average about 25 days, but there is no grace period if you have a balance on your account. Accounts with no grace period accrue interest from the moment the purchase is made.

Minimum Payment - The stated minimum acceptable amount to the lender on a credit card bill. While you may pay more if you wish, this figure represents the smallest sum the lender will accept. Failure to pay at least this much will usually incur a penalty. As of 2005, most major credit card companies have doubled their monthly minimum payments as a percentage of the total amount owed.

Payday Loans - Also known as cash advance loans or quick cash loans, these are short term loans (typically two weeks) intended to help the borrower get buy “until payday.” These loans are not offered by banks but by independent lending stores, often combined with check cashing stores or pawn shops. The fees charged for these loans tend to be quite high when compared with other borrowing options, such as bank or credit card loans.

Refund Anticipation Loan - A loan granted by a tax preparer against an expected state or Federal income tax return. These loans tend to have fees associated with them which translate to annual interest rates that can rank with payday loans. 

Subprime Loan - A loan offered to those with less-than-ideal credit. These loans carry higher fees and higher interest rates than the more common “prime” loans that are offered to those with good credit. The subprime market is quite lucrative, due to the high interest rates, and more and more lending institutions are starting to actively seek out subprime customers.

There are certainly more terms used in the financial world than the ones that we have listed here. These only represent those that are most commonly used in the industry.

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