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
- 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.
- APR (Annual Percentage Rate)The yearly cost of borrowing money on a loan or credit card, stated as a percentage that includes interest and certain fees.
- Savings AccountA bank account meant for storing money you don't need right away, usually paying a small amount of interest on the balance.
- Compound InterestInterest that earns interest — the engine behind long-term growth.
- Certificate of Deposit (CD)A savings product where you lock money away for a fixed term in exchange for a set interest rate, paying a penalty if you withdraw early.
- Money Market AccountA deposit account that blends savings and checking features, often paying higher interest while allowing a limited number of checks or transfers.
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Plain-English education — not personalized legal, tax, or investment advice.