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Have you come a across an acronym or abbreviation you don't recognize? You're not alone! Banking is full of unfamiliar terms — refer to our list below if you need some answers. If you still can't find the information you need, please don't hesitate to ask us. Contact us online, or just drop by a convenient branch location.

FICO Score

A FICO Score is a single number produced to identify the credit risk of an individual at a specific point in time. This method, developed by Fair Isaac & Credit Organization, determines the probability a credit user will pay their bills on time. Invented in the late 1950s, this formula has become the objective measuring stick accepted by lenders to evaluate credit. The higher the credit number, the better the credit. Equifax, Experian, and TransUnion are the three primary credit reporting agencies and consumers can obtain a free credit report once a year from each company.

How do I improve my credit score?

The first thing to do is pay your bills on time. This is a steadfast recommendation from most advisors. Late payments and collections can critically impact your credit score.

Do not apply for credit frequently, the fewer inquiries on your credit report, the better. Each time your score is retrieved, it dings your credit.

Reduce the balances on your credit cards. Comb over your credit report and correct any mistakes. Don't lose too much sleep over a bad score; just make sure you start looking at ways to improve it.


President Franklin D. Roosevelt and Congress created The Federal Deposit Insurance Corporation (FDIC) in response to the devastating stock market crash of 1929. Thousands of the failed banks could not return the money consumers deposited in them. The FDIC now insures depositors up to $250,000 and preserves public trust in the banking system. Managed by a five-member Board of Directors appointed by the President and confirmed by the Senate, the FDIC makes certain that banks operate legally and safely.

The Federal Reserve

Established by President Woodrow Wilson and Congress in 1913, The Federal Reserve, also known as The Fed, constructed the central banking system of the United States. Their primary function is to regulate and stabilize the money supply, by either increasing or decreasing the amount of money in circulation, so as to keep the economy stable. The Fed administers economic services to the government, citizens and financial institutions and is responsible for monetary policy and protecting consumers' credit rights

Money Market vs. Certificate of Deposit

Choosing between a Money Market Deposit Account (MMDA) and a Certificate of Deposit (CD) depends on how soon you want to access your funds. An investor can calculate the exact amount of money a CD will earn, as opposed to an MMDA where earnings are contingent on the amount of funds deposited and prevailing interior rates.

A Money Market Deposit Account is a liquid savings account that pays a fluctuating market interest rate as long as the balance of the account does not fall below the minimum balance requirement. They usually pay a higher interest and also have a higher minimum balance requirement. Sound Community Bank offers an MMDA to make it easier to achieve your financial goals.

A Certificate of Deposit account is another form of a savings account that pays a fixed interest rate. Once you have invested in a CD you can't access the funds until the set maturity date, to guarantee your full earnings. If you do withdraw from the account, you will generally be charged a sizeable fee. Sound Community Bank offers CDs with terms available from 6 months to 5 years and the rate is guaranteed for the term of the account.


APR - Annual Percentage Rate, is the interest rate on an account plus any fees you'll have to pay. It's calculated on a yearly basis and shown as a percentage. 

APY - Annual Percentage Yeild, is the rate you can earn on an account over a year and it includes compound interest.

Unsecured vs. Secured Loan

A secured loan means the loan is secured by an asset such as a car, house or boat. The lender has security for the loan, which usually can allow for a lower interest rate, as opposed to an unsecured loan where there is no security, real or personal property. This type of loan will likely have a higher interest rate and is a higher risk for the lender.

Loan to Value Ratio

This is a lending risk ratio expressed as a percent of the amount of money loaned to the appraised value of an asset. For example, if you want to buy a house that is appraised at $200,000, you have $20,000 for a down payment and want to finance $180,000, your LTV would be 90%. The asset is the security for the loan. We can help reduce the stress that is often associated with your home buying experience. We also specialize in refinancing!

Traveling Abroad and Protecting your Finances

When traveling overseas there are many safeguards you must follow, one of which is protecting your finances.

  • Inform your bank and credit card company that you are traveling and there will be overseas transactions. If you don't take this precaution, your account may be frozen because of suspicious activity.
  • Always wear a money belt and keep your money, credit cards, and passport in different areas—part in your money belt, a safe at the hotel, and also in your wallet. Always know where your money is so that if something happens and your wallet is stolen, you still have funds available in your money belt and hotel safe. Always beware of pickpockets.
  • Never display large amounts of money in public.
  • Exchange your money as you go so you have a mix of funds—credit card, Traveler's Checks and currency.
  • Always keep a little bit of money in your domestic currency. This is especially true if your domestic country is a larger economy i.e. the American dollar, the Euro, Yen etc.
  • Purchase Traveler's Checks before you leave and make sure you allow plenty of time to exchange your money if you exchange it in your home country. Many banks don't carry foreign currency so they will have to order it or send you to a larger bank.


The difference between a company or individual's assets and total liabilities determines the equity. In real estate, equity indicates the difference between the appraised market value of a property and the owner's mortgage debt. Equity is calculated by total assets minus total liabilities.

Debt to Equity Ratio

An estimate of a company's financial leverage determined by the total amount owed to the total amount owned. Total liabilities divided by the total equity multiplied by 100 to give a percentage. This is a comparative measure of debt.

How would my finances be affected in case of a natural disaster?

Victims of natural disasters have many state and federal options after a natural disaster. Property and business owners are eligible for tax breaks that can alleviate some losses. It is important to keep records and copies in a safe place if possible.

Contact your lenders and explain the situation; many lenders will work with victims of natural disasters to establish provisional repayment options. Contact the IRS when disaster hits to prove that a loss has occurred in hopes of qualifying for a casualty loss deduction.

Other Federal Resources:

  • IRS toll-free disaster hotline (1-866-562-5227)
  • Department of Housing and Urban Development
  • U.S. Small Business Administration
  • FEMA

NSF Fees/Overdraft Fees

Non-sufficient fund fees occur when the drawer's deposit balance is less than the amount of the check presented for payment against the account. To prevent NSF fees, sign up for account alerts in online banking to notify you when your balance reaches a designated level.

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