Financial Glossary

An annual fee is a yearly charge by a credit card issuer or financial institution for the privilege of using the card or account.

A balance transfer is moving debt from one credit card to another, typically to take advantage of a lower introductory interest rate.

Bankruptcy is a legal process that helps individuals or businesses unable to repay their debts get a fresh start by discharging or restructuring obligations.

A credit card is a payment card that allows users to borrow funds from a card issuer to pay for goods and services, with repayment due later.

A credit score is a three-digit number that represents a person's creditworthiness based on their credit history and financial behavior.

A credit limit is the maximum amount a lender allows you to borrow on a credit card or credit line.

Credit utilization ratio is the percentage of available credit you are currently using, a key factor in credit scoring.

Credit history is a record of a person's borrowing and repayment activity, including loans, credit cards, and payment timeliness.

A charge-off occurs when a creditor writes off a debt as uncollectible after the borrower has failed to make payments for an extended period.

Debt is an amount of money borrowed from a lender that must be repaid, usually with interest, by a specified date.

The debt snowball method is a debt reduction strategy where you pay off debts from smallest to largest balance, gaining momentum as each debt is cleared.

The debt avalanche method prioritizes paying off debts with the highest interest rates first, minimizing total interest paid over time.

Default is the failure to repay a loan or meet the terms of a credit agreement, typically occurring after several missed payments.

Debt consolidation combines multiple debts into a single loan with one monthly payment, ideally at a lower interest rate.

A FICO score is a type of credit score created by the Fair Isaac Corporation, used by lenders to assess credit risk based on credit report data.

A grace period is the time between the end of a billing cycle and the payment due date during which no interest is charged on new purchases.

An interest-free period is a promotional timeframe during which no interest is charged on purchases or balance transfers, typically offered on credit cards.

A late fee is a charge imposed by a lender or service provider when a payment is not made by the due date.

The minimum payment is the smallest amount a credit card or loan holder must pay each month to keep the account in good standing.

A payment plan is an agreement between a borrower and lender to repay a debt through scheduled payments over a specified period.

A secured credit card is a credit card backed by a cash deposit from the cardholder, typically used to build or rebuild credit history.