C

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cash

Money in the form of notes and coins.

cheque

A form that instructs a bank or other money provider to pay a sum of money to someone else. If a cheque is made out to ‘cash’ or ‘bearer’, then whoever hands the cheque to the money provider can exchange it for cash. A cheque crossed ‘Not Negotiable’ must be deposited to an account.

chosen obstacle

An obstacle to savings that occur as a result of a choice that a person has made. For example, voluntarily reducing working hours from full-time to part-time, or deciding to trade in an older model car for a brand new car.

cleared funds

The amount of money in an account that is available for the customer’s use. Cheques deposited into an account may take up to five working days before they are available for use by the customer. During the five days the cheque funds are called uncleared funds and the customer is usually not able to access the amount of money the cheque represents.

co-borrower

A person who joins another to borrow money. Each individual is jointly and separately responsible for the loan. If one does not pay the other will be required to pay the full balance.

commission

Is a reward or sum of money paid to an introducer of business to a lender, such as a mortgage broker. Usually this commission as no affect to the product been provided to you. Is also referred to money paid to a salesperson.

comparison rate

The interest rate on the loan that includes interest and most (but not all) fees and charges associated with the loan. For example, if a bank advertises an interest rate on a home loan of 5.49%pa, the comparison rate (once fees and charges have been taken into account) might actually be 6.75%pa. Please this may not be accurate as lenders don’t have to disclose all fees into the comparison rate, as the legislation doesn’t cover new fees.

complainant

Someone who is making a complaint.

compound interest

Interest earned over a given period is added to the original sum invested (the principal) and interest is then paid on the entire amount. Over long time frames compound interest can be a significant savings booster.

consumer

Someone who is buying a product or service.

Consumer Credit Code

The Consumer Credit Code governs all credit transactions that are undertaken for personal purposes in Australia. Credit providers must tell you what your rights and obligations are in any credit arrangement. Credit transactions made for business or investment purposes are not governed by the Consumer Credit Code.

contract

A written agreement that shows the terms and conditions regarding the purchase of a product or service.

cooling off period

A specified period, varying between 24 hours and 14 days depending on the type of contract, during which a person/organisation can decide not to make a purchase and to undo a credit contract that has already been signed. There are conditions to the cooling off period – it is important to always read the contract and to not give away rights to a cooling off period. Cooling off periods differ between states in Australia.

credit

Refers to the amount of money a person has. If their bank account is $200 in credit, it means they have $200 in the account. ‘Credit’ also means obtaining goods and services now but paying for them later. This is usually by taking a loan from a financial organisation. For example a mortgage can be taken out to buy a house or a credit card can be issued by a credit card provider to make purchases. Usually interest is charged on any credit provided.

credit assessment statement (CAS)

A document provided by your credit assistance provider prior to applying for a credit product. It will entail your current credit position and objectives, a recommended product, commissions and fees for that product, and alternative solutions. These may also include a credit unsuitability test.

credit card

A person can pay for goods and services using a credit card which is linked to accounts that provide a specific amount of credit.

credit file

Records showing a history of a person’s loan enquiries and directorships, defaults on loans, bankruptcy. Also called a credit history. Credit files are kept and maintained by credit agencies and may be accessed by banks and financial organisations if a person gives their permission and has made an application for a loan or credit card. Note that credit files only contain records of negative events. If a person has always paid bills on time and has never defaulted on loan or credit repayments, there will be no file on that person. This can be access through Veda Advantage

credit history

See credit file.

credit limit

An amount quoted by a financial institution as the maximum amount that can be borrowed on a loan or credit card account.

credit rating

A person’s credit rating is based on their credit history. A person who has a history of mismanaging debts and failing to make payments on time is likely to have a poor credit rating. Banks and financial organisations refer to credit ratings when considering applications for loans and credit cards, etc. A person with a poor credit rating might find it very difficult to obtain such services. Credit providers obtain this information through credit reporting agencies, such as Veda Advantage.

credit service guide (CSG)

A document provided by anyone assisting with credit services. A Sure Harvest mortgage broker would generally provide one at their first meeting prior to entering any discussions regarding your financial situation. It entails who they are, their qualifications and the types of credit services they are able to provide. It also provides the consumer an idea of fees and charges and details how to access a third party with any dispute resolutions. The CSG should also disclose any conflicts of interest.

credit union

A co-operative organisation that makes loans to its members at low interest rates.

creditor

Someone who is owed money. For example, a bank that lends money, a department store that lends money to customers in the form of store credit cards, or a telephone company that is owed money from customers for their quarterly utility bill.

creditor (secured)

A creditor who holds an asset belonging to the debtor as security over a loan. If the debtor fails to repay the loan, the secured creditor has the right to sell the secured asset in order to recover some or all of the money owed. Any assets acting as security must be stipulated in the original loan contract.

creditor (unsecured)

A creditor who has provided a loan to a debtor for which no security has been obtained. Therefore, if the debtor fails to repay the loan, the creditor may need to begin court proceedings against the debtor in order to recover any money owed.