Build

It's much easier to start with good habits than to repair black marks later on.                                                                 

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Restore

You are invited to the most effective program available to clear mistakes made by creditors.

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Protect

Once you have obtained excellent credit, it is necessary for you to protect it.                                             

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Financial Glossary
Understanding Financial, Credit, & Real Estate Terms

F

 A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | XYZ  

Face value  —  The principal amount of a bond, which will be paid off at maturity.

Fair market value   —  The price a willing buyer will pay and a willing seller will accept for real or personal property.

Federal Advisory Council (FAC)   —  Advisory group made up of one representative (in most cases a banker) from each of the 12 Federal Reserve districts. Established by the Federal Reserve Act, the council meets periodically with the Board of Governors to discuss business and financial conditions and make recommendations.

Federal deficit  —  The excess of government spending over its revenue.

Federal Deposit Insurance Corporation (FDIC)  —  An independent deposit insurance agency created by Congress in 1933 to maintain stability and public confidence in the nation's banking system. The FDIC promotes safety and soundness of insured depository institutions and the U.S. financial system by identifying, monitoring and addressing risks to the deposit insurance funds; minimizes disruptive effects from the failure of banks and savings associations; and ensures fairness in the sale of financial products and the provision of financial services.

Federal funds   —  Short-term transactions in immediately available funds between depository institutions and certain other institutions that maintain accounts with the Federal Reserve; usually not collateralized.

Federal funds rate (funds rate)   —  The federal funds rate is the interest rate at which a depository institution lends immediately available funds (balances at the Federal Reserve) to another depository institution overnight. The rate may vary from depository institution to depository institution and from day to day.

Federal margin call  —  A broker's demand upon a customer for cash, or securities needed to satisfy the required Regulation T down payment for a purchase or short sale of securities.

Federal Open Market Committee (FOMC)   —  Twelve-member committee made up of the seven members of the Fed's Board of Governors; the president of the Federal Reserve Bank of New York; and, on a rotating basis, the presidents of four other Reserve Banks. The FOMC meets eight times a year to set Federal Reserve guidelines regarding the purchase and sale of government securities in the open market as a means of influencing the volume of bank credit and money in the economy. It also establishes policy relating to System operations in the foreign exchange markets.

Federal Reserve Act of 1913   —  Federal legislation that established the Federal Reserve System.

Federal Reserve Bank  —  One of the 12 operating arms of the Federal Reserve System, located throughout the nation, that together with their 25 branches carry out various System functions, including operating a nationwide payments system, distributing the nation's currency and coin, supervising and regulating member banks and bank holding companies and serving as banker for the U.S. Treasury.

Federal Reserve District (Reserve district or district)   —  One of the twelve geographic regions served by a Federal Reserve Bank.

Federal Reserve float  —  Float is checkbook money that appears on the books of both the check writer (the payer) and the check receiver (the payee) while a check is being processed. Federal Reserve float is float present during the Federal Reserve's check collection process. To promote efficiency in the payments system and provide certainty about the date that deposited funds will become available to the receiving depository institutions (and the payee), the Federal Reserve credits the reserve accounts of banks that deposit checks according to a fixed schedule. However, processing certain checks and collecting funds from the banks on which these checks are written may take more time than the schedule allows. Therefore, the accounts of some banks may be credited before the Federal Reserve is able to collect payment from other banks, resulting in Federal Reserve float.

Federal Reserve note  —  Currency issued by the Federal Reserve. Nearly all of the nation's circulating paper currency consists of Federal Reserve notes printed by the Bureau of Engraving and Printing and issued to the Federal Reserve Banks which put them into circulation through commercial banks and other depository institutions. Federal Reserve notes are obligations of the U.S. government.

Federal Reserve System   —  The central bank of the United States, created by Congress and made up of a seven-member Board of Governors in Washington, D.C., 12 regional Federal Reserve Banks, and their 25 branches.

Federal Tax Deposit (FTD)  —  Federal Tax Deposits are made up of withholding taxes from employee's paycheck. This withholding includes employee's income tax and FICA (Social Security and Medicare). Employers send withheld money to an authorized financial institution or Federal Reserve Bank.

Fedwire  —  Electronic funds transfer network operated by the Federal Reserve. Fedwire is usually used to transfer large amounts of funds and U.S. government securities from one institution's account at the Federal Reserve to another institution's account. It is also used by the U.S. Department of the Treasury and other federal agencies to collect and disburse funds.

Fiat paper money (or Fiat currency)  —  Paper currency that has value because the government has decreed that it is a "legal tender" for making tax payments and often for discharging other debts and payments as well. Fiat money does not represent a claim on some other form of money or commodity such as gold and silver.

Finance  —  Charge/Cost of credit, including interest paid by a customer for a consumer loan. Under the Truth in Lending Act, the finance charge must be disclosed to the customer in advance. See also Consumer Credit Protection Act of 1988.

Finance charge  —  The total dollar amount paid to get credit.

Finance company   —  A company that makes loans to individuals.

Financial  —  Reference to transactions involving money.

Financial institution  —  An institution that uses its funds chiefly to purchase financial assets (loans, securities) as opposed to tangible property. Financial institutions can be classified according to the nature of the principal claims they issue. See also depository institution.

Financing fee   —  The fee a lender charges to originate a loan. The fee is based on a percentage of the loan amount; one point is equivalent to one percent.

Fiscal agency services  —  Services performed by the Federal Reserve Banks for the U.S. government. These include maintaining deposit accounts for the Treasury Department, paying U.S. government checks drawn on the Treasury, and issuing and redeeming savings bonds and other government securities.

Fiscal policy  —  The federal government's decisions about the amount of money it spends and collects in taxes to achieve a full employment and noninflationary economy.

Fixed exchange rate system  —  Exchange rates between currencies that are set at predetermined levels and don't move in response to changes in supply and demand.

Fixed rate  —  A traditional approach to determining the finance charge payable on an extension of credit. A predetermined and certain rate of interest is applied to the principal.

Float  —  A sum of money that represents checks that are outstanding.

Floating exchange rate   —  A fixed exchange rate is when the value of a currency is fixed by governmental action at some officially determined level in terms of another currency.

Foreclosure  —  The legal process used to force the payment of debt secured by collateral whereby the property is sold to satisfy the debt.

Foreign currency operations  —  Purchase or sale of the currencies of other nations by a central bank for the purpose of influencing foreign exchange rates or maintaining orderly foreign exchange markets. Also called foreign-exchange market intervention.

Foreign exchange desk   —  The foreign exchange trading desk at the New York Federal Reserve Bank. The desk undertakes operations in the exchange markets for the account of the Federal Open Market Committee, and as agent for the U.S. Treasury and for foreign central banks.

Forward exchange  —  A type of foreign exchange transaction whereby a contract is made to exchange one currency for another at a fixed date in the future at a specified exchange rate. By buying or selling forward exchange, businesses protect themselves against a decrease in the value of a currency they plan to sell at a future date.

Fraud  —  Intentional misrepresentation, concealment, or omission of the truth for the purpose of deception or manipulation to the detriment of a person or an organization. Fraud is a legal concept and the application of the term in a specific instance should be determined by a legal expert.

Full Employment and Balanced Growth Act of 1978  —  (Humphrey-Hawkins Act) Federal legislation that, among other things, specifies the primary objectives of U.S. economic policy-maximum employment, stable prices, and moderate long-term interest rates.

Function  —  The action for which a person or thing is particularly fitted or employed.

Functions of money  —  Medium of exchange: Acts as a go-between to make it easier to buy and sell goods or services or pay debts. Allows buyers and sellers to avoid the difficulties associated with barter exchanges of goods and services.

Store of value: Allows people to transfer the purchasing power of their present money income or wealth into the future, ideally without a loss of value. Stores purchasing power between the time money is earned and the time is spent.

Unit of account: Serves as a way to measure and compare the value of goods and services in relation to one another. When comparing prices, individuals can determine if one good is a better buy than another. It also allows people to keep accurate financial records.

Futures  —  Contracts that require delivery of a commodity of specified quality and quantity, at a specified price, on a specified future date. Commodity futures are traded on a commodity exchange and are used for both speculation and hedging.