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Arrears means the unpaid (outstanding) amount that you owe your credit provider.

Balance – the debt owed by the borrower to the credit provider. For example, when you get your credit card statement, the closing balance is the total amount owed by the due date. If you pay only the minimum payment due, you will have an outstanding balance.

A budget is the sum of your income minus the sum of your expenses over a defined period. When you work out your budget, you can see if your outgoings are greater than your incomings.

Cash advance – a loan taken out on a line of credit or credit-card. Generally, cash advances do not have an interest-free period and so the borrower will usually incur interest charges from the first day of the cash advance until the day that it is repaid in full. Sometimes the interest rate for cash advances is higher than the interest rate that applies to purchases. A cash advance may also be applicable.

Credit contract – an agreement between the credit provider and borrower that sets out the ‘terms and conditions’ of the loan (see also ‘contract’).

The Code of Banking Practice establishes the banking industry’s key commitments and obligations to its individual and small business customers. It is the banking industry’s customer charter on good practice banking standards. It is contractually binding on Code Subscribing banks.

Code Compliance Monitoring Committee is an independent compliance monitoring body established under Clause 36 of the 2013 Code of Banking Practice(the Code). CCMC’s key functions are set out in the Code and include:

  • monitoring the Banks’ compliance under the Code;
  • investigating and determining allegations from any person that a Bank has breached the Code;
  • monitoring aspects of the Code referred to the CCMC by the ABA; and
  • initiating its own enquiries into Banks’ compliance with the Code.

Consolidation is a type of refinancing that usually means getting a new loan to pay out a number of other loans.

A contract is a legally binding agreement between two or more parties to do, or to refrain from doing, a particular thing in exchange for something of value. The banker–customer relationship is contractual. Regardless of which banking products or services you use, you’ll enter into one or more contracts with your bank.

Credit is a form of loan that allows you to obtain goods or services before you actually pay for them, but this deferred debt must be repaid within an agreed timeframe and includes an interest payment. Typical forms of credit include credit cards, personal loans, overdrafts and home loans.

A credit card enables a cardholder to access a revolving credit facility to make purchases now for goods and services, and pay later. The cardholder can use the card to make transactions up to a set credit limit.

Credit provider – business that provides you with credit and is sometimes called a ‘lender’.

Your credit report is the official record of your credit history. In Australia, a credit file is kept for anyone who has used credit during the past seven years. Credit files are kept and maintained by credit reporting agencies, and may be accessed by banks and financial institutions if you make an application for credit. The credit reporting agency that keeps these files is regulated under the Privacy Act 1988.

Debit card - A scheme debit card enables a cardholder to make an alternative payment to cash, such as for purchases over the telephone or via the Internet. These cards have a scheme logo on the card, such as Visa or MasterCard, and transactions are processed through the proprietary scheme network. A debit card can be pre-paid or it can be linked to your deposit account at a bank or other authorised deposit-taking institution, and used to access money in your account, similar to an ATM card.

Debt is an amount of money you have borrowed from a bank or other lender, or the amount of money you owe to another party.

Deposit means to put money into your account; for example, when your pay goes into your account, or when you pay cash or cheques into your account.

A debt collector collects debts in the course of business. A debt collector could be acting on behalf of the bank (as an agent or representative) to collect the debt for the bank or collecting the debt for themselves where the debt has been assigned.

Debt assignment is the sale or assignment of a debt to a third party, such as a debt collection agency. Where a bank sells or assigns the debt, the debt collection agency may collect the debt in the banks name (but collect the debt for themselves) or where the customer has been notified of the assignment and collect the debt in their own name.

To be in default means you have not met your obligations under the credit contract, for example, you have missed a repayment or not complied with other terms of your contract e.g. insurance.

A direct debit is an amount of money you authorise a merchant, such as a retailer or a service provider, to deduct from your deposit account or credit or debit card, to pay for goods or services. A credit or debit card will have a scheme logo on the card, such as Visa or MasterCard. You can set up a direct debit to:

  • pay a fixed or variable amount, such as your phone and utility bills, gym membership, or an insurance policy;
  • make a payment on a regular basis, such as on the same day every week, fortnight, month, or annually.

Expenditure is money spent on goods and services

Financial adviser (also known as a financial planner) provides individuals with personal advice on investments. A licenced financial adviser is obliged under the law to act in the best interests of their client when making a recommendation.

Financial counsellor is a free, independent and confidential service. They can help a customer get a clear picture of their financial situation and develop options to help a customer get back in control of their money.

Financial hardship is when a customer is willing but unable to meet their contractual debt obligations because of unexpected events or unforeseen changes that impacts cash flow, for example:

  • Changes in income or expenditure
  • Changes in employment status (such as losing a job or having hours reduced)
  • Significant life events such as a relationship breakdown or death in the family
  • Injury or illness
  • Emergency event or natural disaster.

Financial Ombudsman Service -The FOS is a free and independent external dispute resolution service that considers complaints about financial services, including banking, credit, loans, general insurance, life insurance, broking, financial planning, investments, stockbroking, managed funds or superannuation. The FOS can investigate disputes and make decisions that are binding for the financial services provider.

Hardship notice a verbal or written notification to a bank about a customer’s current or future inability to meet their obligations under their credit contract e.g. repayment obligations .

Income is money you receive in the form of salary or wages, interest from bank accounts, dividends from shares, and rent from investment properties.

Interest is the amount a borrower pays to a lender for using the lender’s money. For example, if you borrow money from a bank in the form of a loan, the bank will charge you interest for using that money. On the other hand, if you lend your money to a bank by depositing it into a bank account or a term deposit, the bank pays you interest.

Lien – this is the right of a lender or trader to retain assets or goods until a debt or an account is repaid.

Minimum payment – the minimum amount to be paid off a credit card statement or loan.

Mortgage – an instrument which contains a pledge (property) and a promise by the borrower to pay the credit provider. A mortgage is recorded in the public records creating a lien.

The National Credit Code is a law governing the lending of consumer credit in Australia.

Net employment income is the amount of money you earn from your employer(s) after tax and before voluntary super contributions .

Overdrawn – Your account is overdrawn if you have taken more account than was actually available as cleared funds. This can happen if you have arranged a direct debit without having enough money in your account to cover the payment. Fees may apply to overdrawn accounts and dishonoured cheques.

Pledge – an item handed over as security for the payment of a debt.

Refinancing means you get a new loan to pay out an existing loan.

To remedy a debt means that you pay back the arrears (and make your normal repayments) or legal action has been taken to recover the debt, for example, repossession or sale of the underlying security.

Repayment – an amount of money to be repaid on a debt usually made in regular instalments.

Savings Money you set aside for a specific purpose.

Secured credit - A form of credit where you’re required to provide an asset (such as a house or car) as security for the loan. In the event that you fail to pay back the loan, a bank or other lender can potentially claim the asset as full or part payment for the loan amount outstanding. For example, home loans and some personal loans are types of secured credit, as are some personal overdrafts.

Security means an asset e.g. a car or property, used to secure the loan which can be accessed by the credit provider to repay arrears if you do not meet your obligations.

Small business means a business having:

  • less than 100 full time (or equivalent) people if the business is or includes the manufacture of goods; or
  • in any other case, less than 20 full time (or equivalent) people.

Term - In relation to a credit facility, the agreed period of time over which a loan must be repaid. For a term deposit, this is the length of time that the amount deposited must be held before you can access it.

Terms and conditions - When you sign a loan or credit application and the bank or other lender accepts the application, you’re effectively entering into a contract with your bank or lender, and in doing so you’re agreeing to a series of terms and conditions. The credit contract will outline the terms and conditions, including how much you’re borrowing and the cost of the credit, such as the applicable interest rate and fees. It will also set out the way the credit is to be repaid, including details of the frequency and amount of repayments. The terms and conditions for your credit contract are available from your bank or lender.

Transaction - An activity such as making a deposit and withdrawal, or transferring funds.

Transfer - to move money from one account to another.

Unsecured credit - Any form of credit where you don’t have to provide an asset as security against the loan. Credit cards, store cards and some personal loans and overdrafts are usually unsecured forms of credit. Unsecured forms of credit usually have higher interest rates than secured forms of credit.

Withdrawal - To take money out of your bank account; for example, when you take cash out at an ATM, or when you make a payment via EFTPOS or cheque.