(Mostly!) AI Generated! Credit and Finance Glossary
- APR (Annual Percentage Rate)
- The yearly interest rate charged on borrowed money, like when you use a credit card or take out a loan.
- Asset
- Anything valuable that you own, like cash, a car, a house or even intellectual property.
- Balance
- The amount of money you have in an account of some kind both positive or negative. Such as the amount of money in your bank account and the amount you owe on a loan or credit card.
- Bankruptcy
- A legal process where legal entity that can't pay their debts can get a fresh start, but it can seriously affect their credit.
- Checks
- A physical check is a paper document issued by a bank account holder that instructs the bank to pay a specific amount of money to the person or entity named on the check. It includes details such as the date, payee’s name, amount, and the account holder’s signature. Physical checks are a traditional method of transferring funds from one account to another.
- Checking Account
- A bank account that is used to receive and spend money on a daily basis. This is the account that usually gives you a debit card and is used to get paid and spend money from. Most people will have electronic Direct Deposit payments but in days past this is the account you would cash and write CHECKS from.
- Credit Score
- A number that shows how good you are at paying back money you borrow. Higher scores mean you're more trustworthy to lenders.
- Collateral
- Something valuable you promise to give a lender if you can't pay back a loan, like your car or house.
- Debt
- Money you owe to someone else, like a lender.
- Default
- Failing to pay back a loan as agreed.
- Equity
- The value of an asset you own, minus any money you still owe on it. Example: Your asset is valued at $100,000 but you have a debt on it of $50,000. In this example you have 50% EQUITY and $50,000 of EQUITY based on these numbers.
- Foreclosure
- When a lender takes back a property because it is in default in some way.
- Fixed Rate
- An interest rate that stays the same for the entire loan period regardless of market fluctuations.
- Interest
- The extra money you pay when you borrow money, or the extra money you earn when you save money in a bank.
- Liability
- This is typically your amount and risk of legal responsibility. It may also be reffered to as the money you owe on a specific debt like loans or credit card debt.
- Loan
- Money you borrow that you have to pay back, usually with interest.
- Mortgage
- A loan specifically for buying a house or real estate, where the property itself is the collateral.
- Principal
- The original amount of money you borrow or invest, not including interest or usually fees.
- Profit
- The value you left over after subtracting all of your costs from a transaction.
- Refinance
- Getting a new loan to replace an old one, usually to get a better interest rate.
- Repossesion
- When a lender seizes the collateral on a loan.
- Risk
- The chance that you might lose the value on any type investment.
- Savings Account
- A bank account where you can store money and typically earn a little interest. The idea is to leave the money untouched for a longer period of time so that it accumulates over time. Therefor a penny saved is a penny earned. It is not a checking or debit account that money is routinely spent from.
- Stock
- A share in the ownership of a company, which can go up or down in value.
- Term
- The length of time an account or agreement will last for such as the time you have to pay back a loan.
- Transaction
- Any activity involving the exchange of something of perceived value for something else of perceived value, like buying something or getting paid for work.
- Unsecured Loan
- A loan that doesn't require collateral, but usually has a higher interest rate because it's riskier for the lender.
- Variable Rate
- An interest rate that changes over time, usually based on the economy.
- Withdrawal
- Taking value out of an account.