Vocabulary

• Debt – Money that is owed or due.
• Credit – The ability of a customer to obtain goods or services before payment, based on the trust that payment will be made in the future.
• Interest – The charge for the privilege of borrowing money, typically expressed as an annual percentage rate.
• Principal – The original sum of money borrowed in a loan, or put into an investment.
• Budget – An estimate of income and expenditure for a set period of time.
• Income – Money received, especially on a regular basis, for work or through investments.
• Expenditure – The action of spending funds.
• Savings – The money one has saved, especially through a bank or official scheme.
• Investment – The action or process of investing money for profit.
• Loan – A thing that is borrowed, especially a sum of money that is expected to be paid back with interest.
• Mortgage – A legal agreement by which a bank lends money at interest in exchange for taking title of the debtor's property.
• Credit Score – A number assigned to a person that indicates to lenders their capacity to repay a loan.
• Bankruptcy – A legal status of a person or other entity that cannot repay the debts it owes to creditors.
• Financial Plan – A comprehensive evaluation of an individual's current and future financial state.
• Debt Consolidation – The process of combining several loans or other debts into one for the purposes of obtaining a lower interest rate or reducing fees.
• Credit Counseling – Professional counseling provided by organizations to help individuals deal with their credit problems.
• Debt Settlement – A negotiated agreement in which a debtor pays less than the total amount owed to the creditor.
• Interest Rate – The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.
• Minimum Payment – The smallest amount of a credit card bill that a consumer can pay, to remain in good standing with the credit card company.
• Late Payment – A payment made to a creditor or lender after the due date has passed.
• Secured Debt – Debt backed or secured by collateral to reduce the risk associated with lending.
• Unsecured Debt – A loan not protected by an underlying asset or collateral.
• Fixed Rate – An interest rate that does not change over the life of a loan or investment.
• Variable Rate – An interest rate that can change over time, based on a market rate.
• Collection – The action or process of collecting money owed.
• Foreclosure – The action of taking possession of a mortgaged property when the mortgagor fails to keep up their mortgage payments.
• Grace Period – The period of time granted by a creditor to a debtor to pay a due without incurring penalties.
• Installment – Regularly scheduled payments that a borrower agrees to make to a lender.
• Lender – An organization or person that lends money.
• Creditor – A person or company to whom money is owed.
• Debtor – A person or institution that owes money.
• APR (Annual Percentage Rate) – The annual rate charged for borrowing or earned through an investment.
• Balance Transfer – The transfer of debt from one credit card account to another.
• Default – Failure to fulfill an obligation, especially to repay a loan.
• Equity – The value of an asset after all debts associated with that asset are paid.
• Garnishment – A legal process that allows a creditor to remove funds from your bank account or paycheck to satisfy a debt.
• Liquidation – The process of converting assets into cash to pay off debts.
• Refinance – To replace an existing loan with a new loan, typically with better terms.
• Repossession – The action of retaking possession of something, especially when a buyer defaults on payments.
• Revolving Credit – A type of credit that does not have a fixed number of payments, such as a credit card.
• Snowball Method – A debt reduction strategy, whereby one who owes on more than one account pays off the accounts starting with the smallest balances first while paying the minimum on larger debts.
• Avalanche Method – A debt reduction strategy, whereby one who owes on more than one account pays off the accounts with the highest interest rate first.
• Budget Deficit – The amount by which spending exceeds revenue over a particular period of time.
• Cash Flow – The total amount of money being transferred into and out of a business or household.
• Disposable Income – Income remaining after deduction of taxes and other mandatory charges, available to be spent or saved as one wishes.
• Net Worth – The total assets minus total outside liabilities of an individual or a company.
• Overdraft – An extension of credit from a lending institution when an account reaches zero.
• Personal Finance – The management of an individual's or family's finances.
• Credit Report – A detailed report of an individual's credit history.
• Financial Literacy – The ability to understand and use various financial skills, including personal financial management, budgeting, and investing.