Have you ever been in a meeting where industry jargon started flying around, and you wished for a translator? Whether you're a credit union employee navigating complex financial terms or in marketing trying to understand your client's world, it can sometimes feel like learning a foreign language. This glossary of financial institution terms is here to help!
Financial Terms that Bridge the Knowledge Gap
Every industry has its own lingo—words and acronyms that professionals toss around like second nature. But this specialized vocabulary can be overwhelming for those on the outside looking in.
Credit unions and financial institutions are no exception. That’s why we’ve created this handy glossary—to make things simpler and help you communicate with confidence.
A
ACH - Automated Clearing House
An electronic deposit or withdrawal from your share account, such as direct deposit of members' salaries and government benefit payments (e.g., social security, welfare, and veterans' entitlements) and preauthorized transfers.
Application completion
When the credit union has received all the information that the creditor regularly obtains and considers in evaluating applications for the amount and type of credit requested
APR - Annual Percentage Rate
The cost of credit on a yearly basis, expressed as a percentage.
APY - Annual Percentage Yield
A percentage rate reflecting the total amount of interest paid on a share account based on the interest rate and the frequency of compounding for a year.
B
Board of Directors
Elected volunteers from the membership who govern the credit union.
C
CAC - Customer Acquisition Cost
The cost of acquiring a new member
CD - Certificate of Deposit
A savings certificate with a fixed maturity date and specified interest rate.
CLV - Customer Lifetime Value
The total revenue a member is expected to generate.
Community charter
Must be based on a single, geographically well-defined local community, neighborhood, or rural district where individuals have common interests and/or interact- more than one credit union may serve the same community
Core (System)
The primary system used by FIs to store and maintain member data and transactions.
CPA - Cost per Acquisition
Specific marketing cost to acquire a new member.
CU - Credit Union
A member-owned financial cooperative is controlled by its members and operated not-for-profit.
D
Disclosures
CUs are required to disclose to members fees, dividend, and interest rates, and other terms in connection with an account before an account is opened, upon request, on periodic statements, and upon subsequent event.s
F
FCU - Federal Credit Union
Backed at the federal level
FinTech - Financial Technology
the technology and innovation that aims to compete with traditional financial methods in the delivery of financial services
Fixed-rate
This rate stays the same throughout the life of the loan, so monthly payments will remain the same over the loan term.
FOM - Field of Membership
The common bond among credit union members, such as employment, geographic location, or membership in an organization.
Funded loans
These are those loans where there is an actual transfer of funds from the bank to the borrower.
H
HELOC - Home Equity Line of Credit
A loan in which the lender agrees to lend a maximum amount within an agreed period, where the collateral is the borrower's equity in their house
I
Indirect Lending
Loans are offered through dealerships or other third parties but funded by the credit union.
L
LOS - Loan Origination System
Software to receive and manage loan applications. Decision-making on these applications can be handled within the LOS, but it is not always.
LTV - Loan-to-Value Ratio
Percentage of the amount borrowed compared to the appraised value.
LTV - Lifetime Value
Value of a CU member throughout their time with an FI
M
Member Dividend
Profits are returned to members through lower rates, better services, or dividends.
Member Services
The department is responsible for helping members with their accounts, loans, and other needs (akin to "customer service" at a bank).
Members
Credit unions don't use the term "customers". They use "members" because each member is an owner of the credit union.
ML - MedianLink
One of the most common LOS systems
Money Market Share Account
Essentially a hybrid between a checking and savings account- it lets you write a limited number of checks each month and sometimes make debit purchases.
N
NCUA - National Credit Union Administration
The federal regulatory agency that is responsible for insuring the deposits of FCUs and CUs
NPS - Net Promoter Score
Measures customer satisfaction and likelihood of recommending the credit union.
O
OLB - Online Banking
A portal or app for members to access and manage their accounts digitally.
R
ROA - Return on Assets
ROA accounts for company debt and net income, which gives a clearer picture of how much profit a business produces
ROAS - Return on Ad Spend
The calculation of ad spend does not take into account additional debt, such as our retainer, LOS fees, etc.
ROI - Return On Investment
ROI is calculated before debt, showing an organization's general profitability. It can be based on higher rates, better services, or dividends.
S
SEG - Select Employer Groups
SEG-based credit unions are focused on providing services to specific employers, whereas community charters are open to people living, working, or worshipping in a geographic area. Some CUs also have open charters that provide a loophole within the SEG by means of a donation to a specific non-profit organization.
Share certificate
A share certificate account is similar to a certificate of deposit (CD) but is issued by a credit union rather than a bank.
SOW- Share of Wallet
The dollar amount an average customer regularly devotes to a particular brand rather than to competing brands in the same product category
U
Unsecured Personal Loans/Installment Loans
When you borrow a set amount of money for almost any personal use and repay it, with interest, in fixed monthly payments until it's paid off.
V
Variable rate
An interest rate on a loan that changes based on fluctuating market conditions throughout the course of the loan term
Conclusion:
And there you have it—a handy reference for some of the most common terms in financial institutions and credit unions.
While we can’t promise you’ll become a financial jargon expert overnight, you’re better equipped to navigate conversations confidently, whether working internally or communicating with a credit union prospect.
Of course, this glossary isn’t exhaustive—there’s always more to learn as the industry evolves. If you’ve come across terms that we didn’t include, feel free to share them! Let’s keep building a resource that benefits everyone.
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