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GLOSSARY
Payroll taxes
Payroll taxes are amounts withheld by an employer from an employee's paycheck, to cover federal, state, and local income taxes. Amounts withheld for specific types of taxes are usually itemized on the payroll stub. After the close of the tax year, the employee must fill out a tax return to determine if the payroll taxes withheld were enough to cover taxes owed.
PC banking
PC banking is a service that provides individual and business customers with access to their banking records from a personal computer.
Penalty
A penalty is a punishment incurred by the failure to follow a rule. In taxes, the IRS charges penalties to those who don't pay their taxes on time. In personal finance, credit card companies charge penalties to those who remit their payments late.
Penalty rate
Penalty rate, in lending, is a higher interest rate that goes into effect in default situations. Credit card agreements, for example, state the penalty rate (or default rate) value, along with the conditions that would cause the penalty rate to be triggered. Penalty rates can be several percentage points higher than the regular rate.
Pension fund
A pension fund is a program initiated by an employer to manage monies set aside for employee retirement. Monies deposited into the fund are invested for growth, so that the asset pool can support pension payments made to employees once they retire. Contributions come from employers and employees, and the management of the funds is usually outsourced to a third party.
Pension plan
A pension plan is a program initiated by an employer to manage monies set aside for employee retirement. Monies deposited into the plan are invested for growth, so that the asset pool can support pension payments made to employees once they retire. Contributions come from employers and employees, and the management of the funds is usually outsourced to a third party.
Pension shortfall
A pension shortfall occurs when a company's pension fund doesn't have sufficient funds to meet expected future payment obligations. This can happen in defined-benefit plans, which place the risk of investment returns on the company rather than the employee. If investments underperform, the plan won't have the liquidity available to meet its defined-benefit obligations. In a pension shortfall situation, the company must make additional deposits into the fund. Pension deposits are an expense to the company.
Per diem interest
The amount of interest calculated per day.
Per item charge
Per item charge is an assessment incurred by a banking customer who has exceeded the number of free transactions allowed for his account. If the account allows up to 25 transactions per month, the customer will have to pay the per item charge for every transaction after the 25th one.
Per-diem interest
Per-diem interest is one day's worth of interest on a debt. Since interest rates are based on a period of one year, per-diem interest is calculated by extrapolation. The total annual interest expense is calculated based on the rate, and then that figured is divided by 360 or 365 (for ordinary and exact interest, respectively) to calculate per-diem interest. Per-diem interest is used to calculate the first month's interest when a loan funds on a day other than the first of the month.
Periodic cap
A protective measure for consumers that limits the maximum amount the interest rate on an adjustable rate mortgage can change in a time interval, usually 6-12 months.
Periodic interest rate
Periodic interest rate is a loan's rate of interest, converted to be applicable to a time period other than one year. Interest rates are normally based on one year, but sometimes it's useful to know the rate to be charged over one week, one month or one quarter. These are periodic rates, and they're determined by extrapolation. If the rate on a loan is 10 percent, the periodic rate used to calculate one quarter's interest is 2.5 percent.
Periodic rate
Penalty rate, in lending, is a higher interest rate that goes into effect in default situations. Credit card agreements, for example, state the penalty rate (or default rate) value, along with the conditions that would cause the penalty rate to be triggered. Penalty rates can be several percentage points higher than the regular rate.
Periodic rate cap
A periodic rate cap is a limitation on how much an interest rate can be adjusted from one period to the next. Periodic rate caps are important to holders of adjustable-rate mortgages (ARMs); higher caps increase the possibility that the loan payments will rise beyond affordability at one adjustment.
Permanent life insurance
Permanent life insurance is a category of life insurance programs that offers a death benefit plus a tax-advantaged retirement investment account. Growth of funds in the investment account usually doesn't incur income tax liabilities. Permanent life insurance is considered an open-ended policy, in that the policy remains in force indefinitely and doesn't have to be renewed.