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GLOSSARY
Backup withholding
Backup withholding is income tax collected on various types of 1099 income, including investment income. At the time the income is received, or when an investor withdraws funds from an investment account, the payer holds back a percentage of funds to ensure that the appropriate tax liability is paid when the tax becomes due after the close of the tax year.
Bad debt reserve
A bad debt reserve is a balance sheet account that estimates the amount of non-collectible debts that a company expects to experience.
Bad debts
Bad debt refers to funds owed to a creditor that aren't collectible. Debts are only classified as bad debt after all avenues of collection have been exhausted. From a business/balance sheet perspective, bad debt amounts are worthless, and usually written off. From a tax perspective, businesses and individuals are allowed to deduct bad debts under certain circumstances.
Bailing out
Bailing out is the process of providing funds to an individual or company that would otherwise become insolvent. The term can also refer to the act of selling a security impulsively at any price in a crashing market.
Balance
the dollar amount that is left to be paid on a loan.
Balance sheet
A balance sheet is a financial statement that represents a company's revenue-generating assets, as well as its liabilities and net worth. Balance sheets are used to evaluate a company's financial strength.
Balance transfer
A balance transfer is the movement of a debt balance from one credit card account to another. Credit card companies often try to lure in new customers by offering low interest rates on balance transfers. There may be transaction fees associated with processing a balance transfer.
Balance transfer fee
A balance transfer fee is a charge assessed when a debtor moves a debt balance from one credit card account to another. The fee, often a percentage of the debt balance, is charged by the creditor that assumes the debt.
Balanced fund
pursues a hybrid investing strategy. Balanced funds contain a mix of stocks, bonds, and other types of securities in order to offer investors both capital appreciation and income generation.
Balloon loan
A long-term loan in which the payments aren't set up to repay the loan in full by the end of the term. This loan has one large payment due when the loan matures. The type of loan often has a low interest payment. The major disadvantage with this loan is the borrower needs to be disciplined in preparation for the large single payment.
Balloon mortgage
It is a short term payment with mortgage payments too low to pay off the balance in the specified time. This loan thus requires payment in full usually a lump sum amount, payable earliear than the normal amortization period by paying the balance in a shorter period of say 5-7 years. For eg. The amortization period can be 30 years, but the payment will be required to be paid in full at the end of a 5 or 7 or 10 year period through a lump sum or balloon payment.
Balloon note
A balloon note is a type of long-term loan that defers a large part of the principal payoff until maturity. Balloon notes are characterized by low principal and interest payments during the life of the loan, and one large, final payment due at maturity.
Balloon payment
The last and final balance amount of a loan that is paid at the end of a balloon mortgage is called a balloon payment.
Bank
A bank is a licensed, commercial entity that accepts and pays interest on deposits, and makes payments as directed by depositors, by way of check-writing and/or debit card usage. Banks may also make loans and provide various other financial services to individuals and businesses.
Bank credit
Bank credit is a financial institution's promise to advance funds, up to a certain limit, on behalf of an individual or business. Those funds may be repaid in the form of structured debt, or by way of funds held on deposit with the bank.