Clark County Credit Union (Las Vegas, NV)

Financial Terms Glossary

At CCCU, we believe personal finance should be simple. If you're not a financial expert, all of the terms and acronyms can start to feel like alphabet soup. The good news is, once you understand the definitions you'll see that it's really not as complex as you might think. Here's a look at some of the most common financial terms and their meanings.

HELOC

A home equity line of credit, or HELOC, is a credit line that's based on the equity you have in your home. This allows you to tap into the funds when you need them, up to your preset credit limit. A HELOC typically has a variable interest rate and the payments are not fixed. You only make payments on the amount you draw off of the line of credit.

Home Equity Loan

Unlike a HELOC, a home equity loan gives you a lump sum of money upfront. In return, you'll make fixed payments throughout the life of the loan. These loans typically have a fixed interest rate.

APR

The acronym APR stands for "annual percentage rate." This term is used to describe the interest rate you'll pay on loans, credit cards, and other debts. It's the simple interest rate plus any fees charged by the lender, stated on an annual basis.

APY

The annual percentage yield, or APY, is your annual rate of return, stated as a percentage. Unlike APR, this calculation includes compound interest. APY is used to show the rate of return on an investment or savings vehicle.

The formula for calculating APY factors in the frequency of interest payments. Since frequent compounding results in faster account growth, an investment that pays the same interest more often would have a higher APY.

CD

Certificate of Deposit (CD) is a type of savings vehicle that is federally insured. CDs pay a fixed interest rate and require you to give up access to your money for a fixed amount of time. CD terms generally range from three months to five years.

These accounts usually pay a higher rate than a traditional savings account and are popular because they offer a guaranteed rate of return with very little risk. The trade-off is that you'll need to keep your money in the account for the entire term or you'll have to pay early withdrawal fees.

Bonus Dividend

Unlike most regular banks, credit unions are owned by their members. Some, like CCCU, give certain borrowers and savers a "bonus dividend." Much like the dividends you would receive on a stock holding, this is a return of a portion of our profits. As a non-profit, we give these earnings back to members in the form of lower rates, services and cash back as a Bonus Dividend.

Each year, in January, we put a cash deposit into the accounts of qualified members in the form of a Bonus Dividend. Since 2001, we've paid over $68 million back to our members.

Now that you understand some of the most common financial terms, you're in a better position to take control of your personal finances. If you're considering taking out a loan or you're looking for a smart way to save, CCCU can help! Contact us today to learn more.

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