Financial Glossary

Understanding these terms will empower you to make informed decisions ...

• Annual Percentage Rate (APR): The yearly interest rate charged on borrowed money.
• Balance Transfer: Moving debt from one credit card to another, often to take advantage of lower interest rates.
• Credit Score: A numerical representation of creditworthiness, affecting loan approvals and interest rates.
• Debt Consolidation: Combining multiple debts into one loan or payment plan, ideally at a lower interest rate.
• Debt Snowball Method: A debt repayment strategy where debts are tackled from smallest to largest balance.
• Debt Avalanche Method: A debt repayment method focusing on highest-interest debts first to reduce total interest.
• Emergency Fund: Savings reserved for unforeseen expenses or financial emergencies.
• Minimum Payment: The smallest monthly amount required to keep a debt account in good standing.
• Principal: The original sum of money borrowed, not including interest or fees.
• Secured Debt: Loans backed by collateral, such as car loans or mortgages.
• Unsecured Debt: Loans not backed by collateral, e.g., credit card or personal loans.