Covenant

If you are religious then you may have come across the term covenant in a Christian context and therefore be familiar with what it is - which is simply this: an agreement.

It is usually used in legal wording to describe a loan agreement in which the person who borrows the money makes a promise to do some things and not others: for instance you will use the loan to buy items for the house and not to go out drinking every Friday night and pour the money down the drain, as it were.

Covenants can be affirmative where they require you to do something (for instance ensure you are always insured) or be negative where they require you not to do something.

Related Articles

Joint Account
Gold option
Market research
Liquidity
Frozen account

More Financial Words and Vocabulary Explained