Financial Glossary
Unsure about financial terms like APR or Debt Consolidation? Our Financial Glossary breaks down key concepts to help you take charge of your money. Whether you’re exploring debt relief or building better habits, this resource offers clear, simple answers from Money Fit’s nonprofit experts.
A
- Amortization
- Paying off a loan over time with regular payments covering principal and interest.
- Annual Percentage Rate (APR)
- The yearly cost of borrowing money, including interest and fees, shown as a percentage.
B
- Bankruptcy
- A legal way to clear or reorganize debts when you can’t pay them back.
- Budget
- A plan to track your income and spending, helping you meet money goals.
C
- Compound Interest
- Interest earned on your savings plus the interest already added.
- Credit Card
- A card letting you borrow money up to a limit, to be paid back later.
- Credit Counseling
- Expert help from nonprofits to manage debt and improve your finances.
- Credit Report
- A record of your borrowing and payment history from a credit bureau.
- Credit Score
- A number showing how well you handle credit, affecting loans and rates.
- Creditor
- A person or company you owe money to, like a lender or bank.
D
- Debt Consolidation
- Combining multiple debts into one payment, often with a lower rate.
- Debt Management Plan (DMP)
- A program to repay debts through one monthly payment, set up by counselors.
- Debt Relief
- Ways to reduce or erase debt, like counseling or settlement.
- Default
- Failing to pay a loan or debt on time, which can hurt your credit.
- Down Payment
- An upfront payment for a home or big purchase, reducing the loan amount.
E
- Emergency Fund
- Cash saved for surprises, like car repairs or sudden job loss.
- Expense
- Money you spend on needs or wants, tracked in a budget.
F
- FICO Score
- A widely used credit score that lenders check for loan approvals.
- Financial Literacy
- The ability to understand and manage money wisely.
- Foreclosure
- When a lender takes your home because you missed mortgage payments.
G
- Grace Period
- Extra time to pay a bill or loan without penalties or interest.
H
- Home Equity
- The value of your home minus what you owe on the mortgage.
- Housing Counseling
- Free or low-cost advice on buying a home, renting, or avoiding foreclosure.
I
- Income
- Money you earn from jobs, gigs, or investments.
- Interest Rate
- The percentage you pay to borrow money or earn on savings.
J
- Judgment
- A court order to pay a debt, often after a creditor sues.
K
- Key Rate
- A main interest rate set by banks, affecting loans and savings.
L
- Late Fee
- A charge for missing a payment deadline on a loan or credit card.
M
- Minimum Payment
- The smallest amount you must pay on a credit card to stay current.
- Mortgage
- A loan to buy a home, paid back over years with interest.
N
- Net Worth
- Your total assets (what you own) minus your debts.
- Nonprofit Credit Counseling
- Free or low-cost help from a nonprofit to manage debt and finances.
O
- Overdraft
- Spending more than what’s in your bank account, often with a fee.
P
- Payday Loan
- A short-term, high-interest loan due on your next payday.
- Predatory Lending
- Unfair loan practices that trap borrowers with high fees or rates.
- Principal
- The original amount you borrow, before interest is added.
Q
- Quarterly Interest
- Interest paid or earned every three months on a loan or savings.
R
- Refinancing
- Replacing an old loan with a new one for better terms or rates.
- Repossession
- When a lender takes back property, like a car, for unpaid loans.
S
- Savings Account
- A bank account where you save money and earn interest.
- Secured Debt
- A loan backed by collateral, like a car or house.
- Student Loan
- Money borrowed for school, repaid after you finish.
- Student Loan Forgiveness
- A program that cancels student debt under certain conditions.
T
- Title Loan
- A high-interest loan using your car title as collateral.
V
- Variable Expense
- Costs that change each month, like groceries or gas.
W
- Wage Garnishment
- When a creditor takes part of your paycheck to pay a debt.
- Wealth Building
- Growing your money over time through saving and investing.
Mastering these terms is a big step toward financial freedom, but knowing where to start can feel tricky. Money Fit’s nonprofit experts are here to simplify it all—whether you’re tackling debt, building savings, or planning for a home. Got questions or need personalized advice? Reach out to our Certified Credit Counselors for free, friendly guidance tailored to your goals.
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Find important answers, advice, and analysis to a wide range of personal finance topics in our Money Motivations blog.