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Creating the Extraordinary Student Experience: Office of Student Life

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Financial Education

See below for financial definitions and tools:

Financial Education: Definitions

ATM Fee: some banks allow for only a limited amount of ATM transactions per month, and charge a fee if this number is exceeded. Fees can come both from your home bank AND the bank that hosts the ATM you are using.

Annual Fee: Some credit cards have this fee, which can be thought of as a "membership" fee. Annual fees typically range between $0 (no annual fee) to $50.

Annual Percentage Rate (APR): The yearly cost of your credit card balance. In other words, the APR is the interest rate, expressed per year, applied to your purchases.

Certificate of Deposit (CD):an interest-earning savings instrument offered by an institution that accepts deposits for a fixed amount of time.

Check Re-order Fee: banks typically deduct this fee automatically from your checking account when you order new checks.

Compound Interest: the process of earning interest on the reinvested interest as well as on the original amount invested.

Credit History: Your credit history determines your credit score and is comprised of:

  • Payment history (i.e. timely payments)
  • Amount of debt outstanding with all creditors
  • Length of time as a credit user
  • Very recent history
  • Mix of credit held

Credit Limit: Your credit limit is the dollar amount you may charge up to on your credit card. There may be a fee associated with charging more than this limit.

Credit Score: A numerical representation of your financial strength. This score is typically used by lenders to assess your creditworthiness and is comprised of your payment history, debt owed, length of credit history, recent credit, and types of credit used.

FAFSA: FAFSA stands for: Free Application for Federal Student Aid. To qualify for federal aid, students must complete and submit a FAFSA every year. The FAFSA determines your eligibility for federal financial aid as well as scholarships, grants, and other aid opportunities.

FICO: FICO stands for: Fair Isaac Corporation. Your FICO score is your credit score, and ranges from 300 - 850. A key point to meet, or surpass, is 620. You have three FICO scores, one for each of the three credit bureaus - Experian, TransUnion, and Equifax.

Finance Charges: This is the total cost of credit, which includes interest and other fees associated with your credit card.

Grace Period: This is a time period, which is typically between 25-30 days, before interest begins accruing on your purchases. If you pay the balance before the grace period, you won't be charged any interest on it. In other words, you only benefit from a grace period if you are not carrying a balance forward from a previous monthly statement. A grace period can begin when you make a purchase, or when the purchase is actually posted to your account.

Grants: A grant is gift assistance that is awarded by the federal or state government or Ohio State to undergraduate students who have high financial need. Grant money does not need to be repaid by the student.

Late Fee: This is a fee which may be charged if you make a payment late. There is no limit to what credit card companies can charge for late payment penalties, but they typically run around $30.

Liquidity: the speed and ease with which an asset (i.e a car, your savings account, etc.) can be converted to cash

Loans: Loans are a form of financial aid that many students use to help bridge the gap between their personal resources and the cost of pursuing a college degree. There are a variety of loan programs for which a student can be considered. When thinking about loans, keep in mind that, unlike grants and scholarships, loans accrue interest and must be repaid either while a student is attending school, after a student graduates, or after a student withdraws from Ohio State. It is important to understand the loan programs that are available so that a student can make informed decisions about how much money he or she should borrow, if any, and which loan programs are best for his or her needs.

Loan consolidation: Consolidation allows a student to combine all federal student loans into one new loan with a fixed interest rate. It can also allow a reduction in monthly payments by extending the repayment period beyond 10 years. Extending the repayment period increases the total interest payments because you'll be making smaller payments over a longer period. There are no prepayment penalties for accelerating the payback of the consolidation loan. When interest rates are low, consolidation can be an important debt management strategy allowing some borrowers to save money.

Minimum Payment: The lowest amount that can be paid each month on the account's outstanding balance. It is typically not a good idea to only make the minimum payment, as interest will continue to accrue on the remaining balance.

Money Market Account (MMA): Any of a variety of interest-earning accounts that pay relatively high interest rates (compared to regular savings accounts) and offer some limited check writing

Monthly Service Fee or Maintenance Fee: an amount charged each month for just having a checking account open. This is typically waived if a minimum balance, set by the bank, is maintained.

Needs: A need is a necessary fixed expense. An example of a need is your rent or utility expenses.

Overdraft Fee or No Sufficient Funds (NSF): this fee may be charged if an account does not have overdraft protection and a customer bounces a check. The customer will be notified that his or her check has been returned to the person/company it was issued to and a processing fee will be charged. Most merchants will also charge a separate fee for bounced checks.

Per Check Fee: some banks charge a fee for each check written. In some cases, a bank will allow for so many checks to be written each month (ex: three) before the fee is assessed.

Scholarships: Scholarships can come from different sources and have various awarding criteria. Ohio State offers numerous institutional scholarships for incoming freshmen and enrolled students. Ohio State students also receive a wide array of scholarships from external donors and outside resources. Scholarship money does not need to be repaid by the student.

Stop-Payment Fee: If you, or someone you have written a check to, loses a check, you have the option of issuing a "stop-payment" on the check. There is a fee, but it may be your best option in some cases.

Transaction Fees: Any charge other than a purchase typically carries an extra fee, such as a cash advance, late payment, or going over your credit limit.

Vantage Score: This is a new credit scoring system that attempts to create a more standardized credit score. Vantage Scores range from 501 - 990. Unlike FICO, a score of 620 on this measure is not good. The follwing breaks down the Vantage Score in terms of letter grades: 901-990 A; 801-900 B; 701-800 C; 601-700 D; and 501-600 F.

Wants: A want is something you would like to have, but could do without. For example, the latest video game, or fast food on your way to class.

Financial Calculators

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