Credit: Borrowing money or buying now and paying later
Debt: Money you owe
Loan: Money borrowed that must be paid back, usually with interest
Lender: A person or business that gives a loan
Borrower: The person who receives the loan
Credit card: A card that lets you borrow money to buy things and pay later
Credit limit: The most you can borrow on a card
Minimum payment: The smallest amount you must pay each month
Statement: A monthly summary of your card or account activity
Due date: The day a payment must be made by
Late fee: A charge for paying after the due date
APR: Annual percentage rate, the yearly cost of borrowing
Grace period: Time to pay a card balance without being charged interest
Balance (credit card): The amount you currently owe
Paying in full: Paying the whole statement balance so no interest is charged
Credit score: A number that shows how reliably you pay back debts
Credit score range (FICO): 300 to 850
What helps a credit score: Paying on time and keeping balances low
What hurts a credit score: Missed payments and maxing out cards
Credit report: A record of your borrowing and payment history
Credit bureau: A company that collects credit reports; Equifax, Experian, TransUnion
Utilization: The share of your credit limit you're using
Good rule for credit utilization: Stay below about 30 percent
Secured credit card: A card backed by a cash deposit
Cosigner: A person who promises to pay if the borrower doesn't
Collateral: Property pledged to a lender if a loan isn't paid
Mortgage: A loan to buy a home
Down payment: Money paid upfront when buying something expensive
Auto loan: A loan to buy a car
Student loan: A loan to pay for school
Payday loan: A very high-cost, short-term loan that is risky
Interest rate: The percent charged for borrowing
Fixed rate: An interest rate that stays the same
Variable rate: An interest rate that can change
Term (loan): How long you have to repay
Amortization: Paying off a loan in regular payments over time
Default: Failing to repay a loan
Bankruptcy: A legal process when someone cannot pay their debts
Repossession: A lender taking property when a loan isn't repaid
Debt snowball: Paying off the smallest debt first
Debt avalanche: Paying off the highest-interest debt first
Identity theft: Someone using your personal information without permission
Credit freeze: A lock on your credit file to block new accounts
Insurance: Paying a fee so a company covers big costs if something bad happens
Premium: The regular payment for insurance
Deductible: The amount you pay before insurance pays
Health insurance: Coverage for medical costs
Auto insurance: Coverage for car accidents and damage
Renters insurance: Coverage for belongings in a rented home
Life insurance: A payment to family after someone dies
Warranty: A promise that a company will repair or replace a faulty product
Social Security number: A nine-digit US number used for work and taxes; keep it private
W-2: A form from an employer showing yearly pay and taxes withheld
W-4: A form telling an employer how much tax to withhold
Tax return: A form reporting your income and taxes to the government
Tax refund: Money returned when you paid too much in taxes
401(k): A US employer retirement savings plan
IRA: Individual retirement account
Roth IRA: A retirement account with taxed deposits and tax-free growth
Employer match: Money an employer adds to your retirement savings
FDIC: US agency that insures bank deposits, up to $250,000 per depositor per bank
Rule of 72: Divide 72 by the interest rate to estimate years to double money
Compound growth example: $100 at 7% roughly doubles in about 10 years
Overdraft: Spending more than your account holds
Overdraft fee: A charge for overdrawing an account

Free flashcards from Peabody at peabody.kids/flashcards/finance-credit-and-loans