Knowledge is power. Here are some key financial terms everyone should know. Power up!
Paying off of debt regularly over a period of time.
APR (Annual Percentage Rate)
The cost of a loan for one year; including all fees and interest. Expressed as a percentage of the whole.
An adjustable-rate mortgage where interest payments can go up or down.
Anything of value a person or business owns, including: products in inventory, buildings, land, supplies, furniture, and intangible things like trademarks, patents or other intellectual property.
A financial snapshot of a business that includes assets, liabilities, and capitol.
A legal proceeding where a debtor seeks to have certain kinds of debt reduced or officially canceled. There are several different kinds, Chapter 7, 11 and 13 are the most common.
The total money earned or lost at the end of the month.
The money a person or business has in its accounts, assets, and investments.
The money that goes in and out each month.
A summary of a person’s credit history, such as: bankruptcies, loans, late payments, and recent credit inquiries.
A number representing a person’s credit-worthiness based on their credit report. One of the most common scores used in the U.S. is Fair Isaac Corporation’s FICO® score, which ranges from 300 - 850. It’s based on things like: payment history, length of credit history, and total owed. A higher score means a better credit rating.
Interest calculated on the original amount of money as well as the interest it has already earned.
An amount of money owed to a person or business.
When a borrower fails to pay a debt on time.
The decrease in value of assets over time.
The rise in the prices of goods and services over time.
The cost of borrowing money.
An obligation to repay debt, like: bank loans, mortgages, credit card debt, and money owed to suppliers and vendors*.
The ability of an asset to be sold quickly without a loss or discount.
The assets of a person or business minus liabilities.
The lowest interest rate banks will charge their customers, tied to the interest rates set by the Federal Reserve bank.
The amount of money loaned or borrowed that interest is paid on.
A decline in GDP (gross domestic product) for 2 or more consecutive quarters, where usually the stock market and housing markets decline and unemployment rises.
An exchange or transfer of goods, services, and money.