A fuller guide to this term is on the way. In the meantime, the related terms below explain the ideas around it.
Related MoneyPedia terms
- InterestThe money a bank pays you for keeping deposits, or the money you pay a lender for borrowing, calculated as a percentage of the balance.
- APY (Annual Percentage Yield)The real yearly return on a deposit, including the effect of compounding, which makes it the fairest way to compare account rates.
- Credit CardA card that lets you borrow from a lender for purchases up to a limit, requiring repayment and charging interest on unpaid balances.
- OverdraftWhat happens when you spend more than your account holds, leaving a negative balance that the bank may cover for a fee.
- Credit ScoreA number that sums up how you've handled borrowing, shaping the rates you're offered.
- Debt-to-Income Ratio (DTI)The share of your monthly income that goes to debt payments — a key number lenders check.
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Plain-English education — not personalized legal, tax, or investment advice.