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Glossary of debt and savings terms

19. Household income -- The total income of all members of a household, it is an important yardstick used by lenders evaluating applications for joint credit.

20. Individual Retirement Account, or IRA -- A special retirement planning account for individuals. All or part of the contribution in a tax-deferred savings account may be deductible from current taxes, depending on the individual's income and status regarding coverage by an employer-sponsored qualified retirement plan, such as a 401(k) plan. Penalties usually apply for withdrawals before age 59½. Withdrawals are taxed as income. See also Roth IRA.

21. Introductory rate -- Often called the teaser rate, it is the below-market interest rate offered to entice customers to switch credit cards or lenders. Borrowers are urged to pay attention to the regular APR, which is the interest rate that applies once the introductory rate expires.

22. Late fee -- The charge tacked onto tardy payments. Late penalties average from $30 to $35 per month.

23. Minimum payment -- The minimum amount a cardholder must pay to keep the account from defaulting. Usually this amount comes to 2 percent of the outstanding balance.

24. Money market account, or MMA -- A high-yield, FDIC-insured savings account that allows consumers to put their money into accounts that have higher yields than passbook or statement savings accounts. In exchange for the higher rate of interest earnings, consumers usually have to accept more restrictions on withdrawals.

25. Money market mutual fund -- A mutual fund that invests in short-term debt instruments, such as Treasury bills, commercial paper and large CDs. Also referred to as money market fund, or MMF.

26. Mutual fund -- An investment that uses money pooled together from many different investors to purchase stocks, bonds and/or other securities.

27. Non-dischargeable debts -- A debt that cannot be eliminated in bankruptcy. Examples may include some taxes and federally guaranteed education loans.

28. Over-the-limit fee -- The charge for exceeding the credit limit on a card. It generally costs around $30 to $35.

29. Parking -- A term that refers to depositing, or parking, cash in a high-yield money market account until you need to move it to a checking account to pay bills.

30. Payment due date -- A deadline set by the credit card issuer for receiving payment of a debt. It is the customer's responsibility to ensure that the payment is actually received by the issuer on or before the payment due date. The postmark date on a payment by mail does not qualify as evidence that the customer has paid before the payment due date. Customers are urged to allow seven to 10 business days for a payment to get to the issuer. Customers who pay online are urged to find out how long payments take to process. In most cases, an online payment is not an instantaneous debit.

-- Posted: Feb. 25, 2008
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