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Glossary Download PDF

Annual Fee:
The amount a credit card company charges for using their credit card.

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Annual Percentage Rate (APR):
APR is the total amount it costs you to use credit in any given year.

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Budget:
A spending plan for managing your money during a given period of time.

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Cash Flow:
The movement of money you receive and money you spend.

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Checking Account:
An account allowing withdrawals by writing a check or using a debit card.

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Compounding or Compound Interest:
Earning interest on interest on savings and deposit accounts.

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Credit:
An amount of money loaned by a financial institution or credit card company with the expectation that it will be repaid. Interest is charged for the privilege of borrowing that money on unpaid balances.

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Credit History:
A record of how you have repaid your credit cards and loans.

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Credit Limit:
This is the maximum amount of money a financial institution or credit card company will lend you.

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Credit Report:
A detailed record of your personal credit and financial transactions.

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Credit Score:
A rating used by credit reporting companies to help lenders decide whether and/or how much credit they will offer you.

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Credit Union:
A financial institution owned by its members, providing savings and checking accounts and other services to its membership at low fees.

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Debit Card:
A card used to deduct a purchase amount directly from your checking account instead of using a credit card.

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Earned Interest:
Payment you receive for allowing a financial institution to use your money that you’ve deposited in checking and savings accounts and certificates of deposits.

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Expense:
An amount of money spent to pay bills and buy or do something.

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Finance Charge:
Seen on credit card statements representing the actual dollar cost of using credit to maintain a balance.

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Financial Planning:
The process of setting spending priorities, defining goals and developing a plan to achieve them and putting the plan into action.

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Fixed Expenses:
Expenses that cost the same amount every time.

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Grace Period:
On a credit card, the length of time you have before you start accumulating interest on an unpaid balance.

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Gross Income:
The total amount of income from wages before any payroll deductions.

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Individual Retirement Account (IRA):
A long-term, tax-deferred retirement account that lets you set aside money each year. Interest earned on your IRA is tax-deferred until you begin making withdrawals after the age of 59 ½. Making withdrawals before age 59 1/2 results in a 10-percent penalty.

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Inflation:
A rise in the cost of goods and services.

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Interest:
Payment for the use of money (Principal x interest rate x time). A charge for a loan usually calculated as a percentage of the principal.

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Late Fee:
A penalty on all types of credit for making a payment after its due date.

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Loan Term:
The length of time you have to pay off a loan.

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Long-Term Goal:
A goal that will take more than a year to achieve.

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Net Income:
Also called take-home pay. It's the amount of income left after payroll deductions.

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Over-the Limit Fee:
A fee on credit cards for making charges above your credit limit.

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Pay Yourself First:
Taking a certain amount of your paycheck and saving for something you want or need or for long-term goals.

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Principal:
The amount of money someone is willing to loan you and the amount you still owe on that loan.

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Savings:
An amount of money set aside for future purposes.

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Share Account:
Savings account representing your share as member in a credit union that helps you save money and earn interest at the same time.

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Short-Term Goal:
A goal achieved within a week or three months.

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Spending Plan:
Another term for a budget.

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Universal Default:
A clause included in many credit card company agreement that allows a credit card company to increase your interest rate if you make one late payment to any creditor.

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Yield:
The profit, or income, earned from an investment like a certificate of deposit.

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Source:
National Endowment for Financial Education

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