Money Matters Glossary
Do you have questions about what certain banking related words mean? Find definitions in the Money Matters Glossary by clicking a letter or scrolling down the page:
Account
An arrangement between a financial institution and a customer where financial assets can be deposited, held or withdrawn. The most common types of accounts are chequing and savings.
Amortization
The repayment of a loan over a prescribed period. If a loan is for 10 years, the loan is “amortized” or paid back over the 10 years through regular payments that are usually paid bi-weekly or monthly basis. At the end of 10 years (end of amortization period), the loan balance is 0.
Annual Percentage Rate (APR)
The annual interest rate charged for borrowing money. APR is expressed as a percentage that represents the actual yearly cost of funds over the term of a loan.
Auto-deposit
An Interac e-Transfer feature that allows you to have incoming Interac e-Transfer funds deposited directly into your bank account without requiring a security question and answer.
Automated Teller Machine (ATM)
A self-service machine that enables you to pay bills, taking out cash, or depositing cheques. ATMs are also referred to as automated banking machines or ABMs.
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Capital Gain or Loss
The difference between the cost of an asset and the proceeds received from its sale. For example, if you sell a share of stock for $110 that you originally purchased for $100, you have realized a capital gain of $10. If you sell it for $90, you have realized a capital loss of $10.
Canada Deposit Insurance Corporation (CDIC)
A federal crown corporation responsible for providing deposit insurance for Canadian financial institutions including banks, federally regulated credit unions, and loan and trust companies. The deposit insurance provided by CDIC protects your money in the event your financial institution fails. CDIC covers deposits on a range of accounts including savings and chequing accounts, guaranteed investment certificates (GICs) and other term deposits up to $100,000.
Canada Mortgage and Housing Corporation (CMHC)
A federal crown corporation responsible for helping Canadians meet their housing needs by providing access and contributing to the stability of the housing market. CMHC is commonly known for insuring mortgage loans when buyers have less than a 20 per cent down payment on a purchase price.
Co-applicant
An additional person considered in the approval of a loan, mortgage or other financial products who is equally responsible for the amount borrowed and required payments.
Consumer Proposal A formal process that enables you to make an offer to creditors to settle debts based on the consumer’s income and ability to pay. Consumer proposals are arranged by licensed bankruptcy trustees often as an alternative to bankruptcy. Once the proposal is accepted by creditors, they and the consumer are legally bound to the proposal’s terms.
Credit History
A record that indicates how you have managed and repaid debts. Your history will show if you’ve made your scheduled payments on time, any outstanding or current balances you owe and your credit limits on any credit cards, loans or lines of credit you hold. Most negative information is typically shown on your credit history for six to seven years.
Credit Score
A standardized rating based on your credit history. Your credit rating helps financial institutions determine the level of risk for them to loan you money, how much and at what interest rate.
Credit Report
A record of your credit rating and credit history. In Canada, credit reports are provided by two credit bureaus, TransUnion and Equifax.
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Direct Deposit
The electronic transfer of a payment directly from a payer’s account into a recipient’s account.
Dividend
A sum of money paid by a company to its shareholders.
Down Payment
An initial lump sum payment made against a loan. A down payment is often required on larger purchases made with credit, such as a vehicle or a home.
Debt-Service Coverage Ratio (DSCR)
A measurement of how much cash a company generates for every dollar of principal and interest owed. The DSCR indicates a company’s ability to make its debt payments on time.
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Electronic Funds Transfers (EFT)
An electronic transfer of money from one bank account to another either within one financial institution or between one or more. EFT is a broad term encompassing various funds transfers such as direct deposits, debt card transactions, online bill payments and more.
Email money transfer (EMT)
A banking service that allows users to transfer funds between personal accounts via e-mail and their online banking account. EMTs are facilitated by Interac®.
E-Transfer Fraud
E-Transfer fraud occurs when an individual’s email is fraudulently accessed (also known as being hacked) and an incoming e-Transfer is intercepted.
Financial Institution (FI)
A credit union, bank, trust company, brokerage, or any other organization that participates in financial transactions that involve cash or other financial products such as day-to-day banking accounts, loans, mortgages, or investments.
Fixed Interest Rate
An interest rate on a loan or mortgage that is locked-in and does not change for a specified period of time known as the term of the loan.
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Gross Debt Service Ratio (GDS)
A measure financial institutions use to help qualify a borrower for a mortgage. The GDS is used to assess the housing-related expenses a borrower is paying in comparison to their income including mortgage payments, property taxes and sometimes heating and 50 per cent of condo fees, if applicable.
Guaranteed Investment Certificate (GIC)
A type of investment that pays you a fixed rate of return over a fixed term, typically one to five years, with a guarantee that the original amount you deposit will not decrease. GICs are similar to Term Deposits, though the latter typically have shorter terms of 30 to 364 days.
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High-Interest Savings Account
A type of bank account that pays a higher rate of interest than typical savings accounts.
Home Buyer’s Plan (HBP)
A federal government program that allows first-time home buyers to withdraw up to $35,000 from their own Registered Retirement Savings Plan (RRSP) tax-free in order to purchase or build a home. The amount withdrawn must be paid back either as a lump sum or through a repayment schedule of up to 15 years.
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Income Tax
Money collected by the federal and provincial governments from the income of individuals and organizations that is used to fund public programs and services.
Index-linked Term Deposit
A type of deposit product that pays a return based on the performance of one or more stock-market indexes over a fixed term with a guarantee that the original amount you deposit will not decrease.
Interest Rate
The fee for borrowing money, commonly expressed as a percentage of the outstanding balance of a loan and paid on a recurring schedule. An interest rate may be fixed, meaning it is set at a specific value for the duration of a loan term, or floating, meaning it can vary over the term based on the prime lending rate of the financial institution providing the loan.
Investment
An asset or item purchased with the expectation that it will generate income or grow in value over time.
Interac® Online
Enables members to pay for their online purchases directly from their bank account. Payments can only be made through participating retailers and are only available in Canadian funds.
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Joint Account
An account with a financial institution that belongs to more than one person.
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Line of Credit (LOC)
A type of loan that provides a borrower with immediate access to part or all of a pre-determined amount of cash upon demand.
Liquidity
The degree to which an asset is viewed as able to be quickly bought or sold to reflect its monetary value. For example, a savings account is considered a highly liquid asset as it contains easily accessible funds while artwork is considered illiquid because it requires time and resources to sell and access its value.
Loan
An arrangement where a financial institution agrees to lend a borrower a pre-determined sum of money and the borrower agrees to pay the loan back with interest over a specified period of time known as the term of the loan.
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Mortgage
A type of loan issued for purchasing property such as a home.
Mutual Fund
A professionally managed investment that pools the money of many investors in order to put together a portfolio of various kinds of securities such as stocks and bonds.
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Non-registered Investment
Investments held outside of a tax-deferred plan like a TFSA or RRSP registered with the Canada Revenue Agency.
Non-sufficient funds (NSF)
The status of a bank account that does not have sufficient funds to cover withdrawals or purchases.
Nova Scotia Credit Union Deposit Insurance Corporation (CUDIC)
The organization responsible for providing regulatory oversight and deposit insurance for provincially regulated credit unions in Nova Scotia, including CUA. The deposit insurance provided by CUDIC protects your money in the event your financial institution fails. CUDIC covers deposits on a range of accounts including savings and chequing accounts, trust accounts and registered investment accounts up to $250,000.
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Overdraft Protection
A service that allows you to temporarily withdraw funds or make purchases up to a preset limit even if your account does not contain sufficient funds to cover the transaction.
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Personal access code (PAC) or personal identification number (PIN)
A numerical code typically issued with payment cards that is used to confirm many electronic financial transactions, such as making a purchase with a debit card.
Power of Attorney (POA)
The authority to act on behalf of another person in some (or all) financial or legal matters. This is different than a joint account as somebody who has power of attorney does not necessarily own the accounts they are making decisions about.
Pre-authorized Payment (PAP)
A payment that comes out of an account automatically at a scheduled time as per written permission from the account holder.
Prime Rate
The annual interest rate that Canada's financial institutions use for variable loans and lines of credit. The prime rate is influenced by the overnight rate set by the Bank of Canada. CUA’s current prime rate can be found on our rates page.
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Registered Education Savings Plan (RESP)
A tax-deferred account registered with the federal government and designed to help a person set aside money for a child’s education.
Registered Investment Account
An investment account registered with the federal government and given tax-deferred or tax-sheltered. Common registered accounts include Registered Retirement Savings Plans (RRSPs), Tax-Free Savings Accounts (TFSAs) and Registered Education Savings Accounts (RESPs).
Registered Retirement Income Fund (RRIF)
A tax-deferred account into which a person may transfer their RRSP assets in order to provide a source of regular income during retirement.
Registered Retirement Savings Plan (RRSP)
A savings and investment account registered with the federal government that allows you to make tax-deductible contributions while any investment income or growth of assets is tax-deferred. RRSPs are designed to help Canadians save for retirement.
Return on Investment (ROI)
A performance measure used to evaluate the efficiency of an investment or compare the efficiency of a number of different investments.
Robo Investing/Robo Advising
Digital platforms that provide automated, algorithm-driven financial planning services with little to no human supervision. A typical robo-advisor service collects information from clients about their financial situation and future goals through an online survey and then uses the data to offer advice on how a client should invest their assets or automatically invests the client’s funds on their behalf.
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Savings Account
A type of account that typically earns higher interest on funds deposited. A savings account is meant for saving in the short or long term versus being used for day to day transactions.
Tax Free Savings Account (TFSA)
A savings and investment account registered with the federal government that allows you to withdraw funds without paying taxes on investment income or growth of assets in your account. While your returns are tax-free, the amount of money you can deposit into your TFSA each year is limited.
Total Debt Service Ratio (TDS)
This is the percentage of your before-tax income that is used to cover housing costs and all other debt repayment obligations including loan payments and credit card balances. This is often used to help determine your capacity to afford more debt.
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Variable Rate Loan or Mortgage
A loan or mortgage where the interest rate can fluctuate during the length of the term. The rate is set based on the prime rate of the financial institution providing the loan or mortgage.
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Wire Transfer
A form of transferring funds from one bank account to another across a network administered by hundreds of banks or transfer service agencies around the world.
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Contact CUA
Do you have questions about one of the terms listed above, or would like to connect with a member of the CUA team? Complete the form below to submit your question or request.
