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GLOSSARY
Death tax
Death tax is an informal term for estate or inheritance tax. Taxes are payable on the fair market value of the estate's property, net of liabilities, at the time of the decedent's death.
Debenture
A debenture is an unsecured debt security, such as a Treasury bond or Treasury bill. Governments and highly-rated corporations can issue debentures to raise capital. Because there's no collateral supporting the debenture, investors must feel confident in the creditworthiness of the issuer.
Debit balance
Debit balance is an amount owed. In investing, for example, the debit balance reflects the amount of cash funding that a customer's margin account requires for settlement of a transaction.
Debit bureau
A debit bureau is an organization that tracks customers' checking account activities. Information tracked includes check writing and overdraft history. Banks use debit bureau information to identify potentially risky customers, i.e., those that have had a history of mishandling their cash accounts.
Debit card
A debit card is a plastic payment card that's linked to a deposit account. Debit cards are accepted for purchase transactions at participating businesses. When the card is presented and approved for payment, the transaction amount is almost immediately deducted from the account balance. Debit cards can also be used at the ATM for funds withdrawals, deposits, and transfers.
Debt
An obligation or money owed to someone
Debt consolidation
Taking all of your multiple loans and bringing them together to form one single loan. This usually creates a lower monthly payment but extends the length of the loan. Sometimes referred to as a consolidation loan, and commonly used by student loan agencies.
Debt deflation
Debt deflation occurs when the collateral supporting a loan declines in value. This scenario greatly increases risk for the lender and borrower. Consider a mortgage loan that financed 100 percent of the purchase amount: If the home declines in value, the lender's collateral will be worth less than the amount the borrower owes. If the borrower needs to sell the property, he would have to pay cash out of his pocket to cover the difference between the selling price of the home and the amount owed on the mortgage.
Debt instrument
A debt instrument is a document that defines or substantiates a borrower's obligation to repay an obligation or balance due.
Debt retirement
Debt retirement is the repayment of money owed. When a debt is completely paid off, it's said to be retired.
Debt security
A security underlining a loan given by an investor or lender to a recipient. In return for the loan, the recipient agrees to pay interest and to repay the debt by a specified date.
Debt service
Debt service is the total of required principal and interest payments for a given loan over a certain time period.
Debt to available credit ratio
The combined amount of money a person has in outstanding debt, compared to the amount of credit available on all of the individual's credit cards. The higher a person's debt to available credit ratio, the higher risk that person poses to a lender.
Debt to income ratio
A percentage of pre-tax earnings that are used to pay off loans (auto loans, student loans and credit card balances). There are two ratios that lenders use to determine there decisions: The front-end ratio is the percentage of monthly before-tax earnings that are used for house payments (including principal, interest, taxes and insurance). In the back-end ratio, the borrower's other debts are factored in.
Debt-to-available-credit ratio
Debt-to-available-credit ratio is the quotient of an individual's outstanding debt obligations divided by that individual's total amount of approved credit. If a person has only one credit account of $5000 and owes $2500 under that account, the debt-to-available-credit ratio is 50 percent. From a lender's perspective, a higher ratio indicates greater risk.