Term
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Definition
I = PRT
(Interest = Principal × Rate × Time) |
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Term
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Definition
| The starting amount of money invested or borrowed |
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Term
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Definition
| The percentage rate (converted into decimal form) |
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Term
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Definition
T = P + I
or
A = P + I
(Total Account Value = Principal + Interest) |
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Term
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Definition
| The number of years money is invested or borrowed |
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Term
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Definition
| The original amount of money borrowed. |
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Term
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Definition
| The fixed amount paid each month toward a loan. |
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Term
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Definition
| Total Loan Payment – The full amount repaid over the life of the loan. |
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Term
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Definition
Interest – The cost of borrowing money, calculated as a percentage of
the loan. |
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Term
| APR (Annual Percentage Rate) |
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Definition
APR (Annual Percentage Rate) – The yearly cost of borrowing money,
including interest and fees. |
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Term
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Definition
| Term Length – The duration of the loan, typically in months or years. |
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Term
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Definition
Credit Limit – The maximum amount a cardholder can borrow on a
credit card. |
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Term
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Definition
| Minimum Payment – The smallest required payment to avoid penalties. |
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Term
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Definition
Unpaid Balance – The remaining balance after a payment has been
made. |
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Term
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Definition
Periodic Rate – The interest charged on a credit card balance over a
specific period (e.g., monthly). |
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Term
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Definition
Statement Balance – The total balance owed at the end of the billing
cycle. |
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Term
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Definition
Grace Period – The time between a purchase and when interest begins
accruing if the balance is not paid in full. |
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Term
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Definition
• Cash Advance – Borrowing cash against a credit card, often with higher
interest rates. |
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Term
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Definition
| Late Fee – A penalty charged for missing a payment due date. |
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Term
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Definition
Balance Transfer - Moving debt from one credit card to another, often
to take advantage of lower interest rates. |
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Term
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Definition
| Installment Loan – A loan repaid in fixed payments over time |
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Term
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Definition
• Compound Interest – Interest calculated on both the principal and any
previously accrued interest. |
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Term
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Definition
Credit Score – A numerical representation of a person’s creditworthiness
based on financial history. |
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Term
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Definition
Debt-to-Credit Ratio – The proportion of available credit a person is
using, impacting credit scores.
Financial Responsibility |
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Term
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Definition
| Budgeting – Planning income and expenses to manage finances effectively. |
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Term
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Definition
| Emergency Fund – Savings set aside for unexpected expenses. |
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Term
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Definition
Debt Consolidation – Combining multiple debts into one loan with a
single payment. |
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Term
| Secured vs. Unsecured Loans |
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Definition
Secured vs. Unsecured Loans – Secured loans require collateral, while
unsecured loans do not. |
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Term
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Definition
Revolving Credit – Credit that remains available as long as the balance
is paid down. |
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Term
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Definition
Loan Default – Failure to make required loan payments, leading to penal-
ties or legal action. |
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Term
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Definition
| Amortization – The process of gradually repaying a loan through scheduled payments. |
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Term
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Definition
Debt-to-Income Ratio – A measure of financial health comparing total
debt to income. |
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Term
| Fixed vs. Variable Interest Rate |
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Definition
Fixed vs. Variable Interest Rate – Fixed rates remain constant, while
variable rates fluctuate based on market conditions. |
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Term
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Definition
| Auto Loan – A loan used to finance the purchase of a vehicle. |
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Term
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Definition
| Mortgage – A long-term loan for purchasing a home. |
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Term
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Definition
| Student Loan – A loan taken to cover education costs, often with deferred |
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