Bankruptcy
A legal proceeding involving a person or business that is unable to repay outstanding debts.
Amortization
The process of spreading out a loan into a series of fixed payments over time.
Annual Percentage Rate (APR)
The annual rate charged for borrowing or earned through an investment, which represents the actual yearly cost of funds over the term of a loan.
Compound Interest
Interest calculated on the initial principal and also on the accumulated interest of previous periods of a deposit or loan.
Principal
The amount of money borrowed or invested, upon which interest is paid.
Diversification
A risk management strategy that mixes a wide variety of investments within a portfolio to minimize the impact of any single asset's performance on the overall portfolio's returns.
Asset Allocation
The process of dividing an investment portfolio among different asset categories, such as stocks, bonds, and cash.
Credit Score
A numerical expression based on a level analysis of a person's credit files, to represent the creditworthiness of an individual.
Debt-to-Income Ratio (DTI)
A personal finance measure that compares an individual's debt payment to his or her overall income.
Fixed Interest Rate
An interest rate on a liability, such as a loan or mortgage, that remains the same either for the entire term of the loan or for part of the term.
Variable Interest Rate
An interest rate on a loan or security that fluctuates over time because it is based on an underlying benchmark interest rate or index that changes periodically.
Liquidity
The ease with which an asset, or security, can be converted into ready cash without affecting its market price.
Default
Failure to repay a debt including interest or principal on a loan or security.
Balance Transfer
The process of transferring high-interest debt from one or more credit cards to another card with a lower interest rate.
Annual Fee
A yearly fee that may be charged for having a credit card or access to another financial service
Minimum Payment
The smallest amount of a credit card bill that a credit card holder must pay each billing cycle to keep the account in good standing.
Interest
The charge for the privilege of borrowing money, typically expressed as an annual percentage rate.
Predatory Lending
Unfair, deceptive, or fraudulent practices of some lenders during the loan origination process.
Payday Loan
A type of short-term borrowing where an individual borrows a small amount at a very high rate of interest.
Debt
Money owed by one party, the borrower or debtor, to a second party, the lender or creditor.
