Financial Glossary
Common financial terms and definitions to help you understand your money better.
The yearly interest generated by a sum that's charged to borrowers or paid to investors. APR is expressed as a percentage that represents the actual yearly cost of funds over the term of a loan.
Interest calculated on the initial principal, which also includes all of the accumulated interest from previous periods on a deposit or loan. It's essentially 'interest on interest'.
A method of paying off debts where you make minimum payments on all debts, then use any remaining money to pay off the debt with the highest interest rate.
A debt reduction strategy where you pay off debt in order of smallest to largest, gaining momentum as you knock out each balance.
Money stashed away that people can use in times of financial distress. The purpose of an emergency fund is to improve financial security by creating a safety net.
An interest rate on a liability, such as a loan or mortgage, that remains the same either for the entire term of the loan or for part of the term.
The original sum of money borrowed in a loan or put into an investment. In the context of a loan, it refers to the amount still owed, separate from interest.
A performance measure used to evaluate the efficiency or profitability of an investment or compare the efficiency of a number of different investments.
Any type of employment undertaken in addition to one's full-time job. A side hustle is generally freelance or piecework in nature, providing a supplemental income.
An interest rate on a loan or security that fluctuates over time because it is based on an underlying benchmark interest rate or index that changes periodically.