Education & resources
The financial dictionary
44 terms, each in one or two sentences. This is the page behind every “?” on the site — if a number on a product card ever needed explaining, its explanation is here.
Bank accounts
What an account pays you and what it quietly costs you. Between them, these terms explain almost every line on a bank statement.
- APY
- Annual percentage yield: what a deposit earns in a year with compounding included. Unlike a plain interest rate, it lets you compare accounts directly.
- Monthly fee
- The maintenance charge a bank applies each month for keeping the account open. Most banks waive it if you meet a balance or direct deposit condition.
- Fee waiver
- The condition that cancels the monthly fee — typically a minimum balance, a recurring direct deposit, a card linked to the account, or being a student.
- Opening deposit
- The smallest amount you have to put in to open the account. It is a one-time requirement, separate from any ongoing minimum balance.
- Account bonus
- A one-time payment for opening an account and meeting a condition, usually a direct deposit or a minimum balance held for a few months. Offers change often and are frequently limited by state.
- Account perks
- Extras the bank attaches to the account itself — early access to direct deposit, fee reimbursements, overdraft grace. They are worth checking because they rarely show up in the headline rate.
- ATM access
- How many cash machines you can use without a fee, counting the bank's own network plus any shared network it joined. Online-only banks usually rent someone else's network instead of running their own.
- Branches
- How many physical offices the bank runs in the United States. It matters if you deposit cash, need notarization, or prefer talking to someone in person.
- FDIC insurance
- Federal deposit insurance. If an insured bank fails, the FDIC covers your deposits up to the standard limit — currently $250,000 per depositor, per insured bank, for each ownership category.
- Compound interest
- Earning a return on the returns you already earned, not just on what you put in. It is why time in the market matters more than the size of the first deposit, and why the curve bends upward rather than running straight.
- App rating
- The public average score of the bank's mobile app in the app stores. A useful proxy for day-to-day digital banking quality, not a measure of the bank itself.
- Total assets
- Everything the bank owns — loans, securities, cash. It is the standard measure of a bank's size and the one U.S. regulators publish quarterly.
Credit cards
The four numbers on a card agreement that decide what it costs: the fee, the rate, the rewards and the fine print on spending abroad.
- Annual fee
- What the issuer charges every year just to keep the card open, whether you use it or not. A $0 fee card can still cost you in interest.
- Regular APR
- The yearly interest rate applied to any balance you carry past the due date, once any promotional period ends. Ranges mean the rate you get depends on your credit profile.
- Intro APR
- A temporary promotional rate — often 0% — that applies for a fixed number of months on purchases, balance transfers, or both. After it ends, the regular APR takes over.
- Rewards
- What the card gives back on spending: cash back, points, or miles. The headline rate usually applies only to specific categories or up to a cap.
- Welcome bonus
- A one-time reward for spending a set amount within the first months. It is the most volatile figure on a card: issuers change it often, so check it on the issuer's own page before applying.
- Foreign transaction fee
- A percentage the issuer adds to every purchase processed outside the United States. Travel cards often drop it; everyday cards usually do not.
- Credit score
- The score range an issuer suggests for approval. It is guidance, not a guarantee: income, existing debt and your history with that bank all weigh in.
Loans and mortgages
Where the cost of borrowing hides. The rate is the advertised number; these are the ones that decide what you actually pay.
- Interest rate
- The yearly rate used to calculate the interest portion of your mortgage payment. On its own it tells you what the loan costs to borrow, not what it costs to get.
- APR
- Annual percentage rate: the interest rate plus the lender's own costs — origination, discount points, some closing fees — spread across the life of the loan. It is almost always the higher of the two, and the gap between them is what the loan actually costs you to set up.
- Origination fee
- What the lender charges to process and underwrite the loan, usually quoted as a percentage of the amount borrowed. It is already baked into the APR, which is why two lenders can quote the same rate and not cost the same.
- Discount points
- Money paid up front to buy the interest rate down — one point is 1% of the loan. A rate quoted with points paid is not comparable with one quoted without them, even when the numbers look alike.
- Time to close
- How long it takes from an accepted offer to the day the loan funds and the house is yours. It depends on the appraisal, the title search and your paperwork as much as on the lender.
- HELOC
- Home equity line of credit: a revolving line secured against the equity you already own, drawn as needed rather than taken as a lump sum. The rate is usually variable, and your house is the collateral.
- PMMS
- Freddie Mac's Primary Mortgage Market Survey, the weekly national average published every Thursday. It covers conforming conventional loans for buyers with strong credit and 20% down — not FHA, VA or jumbo.
- Loan type
- Which program the mortgage runs through: conventional, FHA, VA or jumbo. The program sets the credit and down-payment floor, the insurance you have to carry, and the size of loan allowed.
- Student eligibility
- Whether the bank offers an account designed for students, usually with the monthly fee waived while you are enrolled and an age limit.
Insurance
A policy is priced by three numbers, and the cheapest premium is usually the one with the worst version of the other two.
- Deductible
- The share of every claim you pay before the insurer pays anything. Raising it lowers your premium and raises what a bad day costs you, which is the whole trade: cheaper to hold, more expensive to use.
- Coverage limit
- The most the policy will pay on a claim. Anything above it comes out of your pocket, which is why a low limit on a liability policy is the gap that hurts most.
- A.M. Best rating
- An independent grade of an insurer's ability to pay claims, from A++ (Superior) down. It rates a specific insurance company, not a brand — and it says nothing about price or service, only about whether the money is there.
- Bundling
- Buying two or more policies — usually auto and home — from the same insurer for a discount on both. It is the single largest discount most insurers advertise, and the one most often left unclaimed.
- Claims process
- How you actually report a loss and get paid: in an app, over the phone, or through an agent. It is the part of the policy you only find out about on your worst day.
Investing and retirement
What a platform charges you, what it lets you buy, and the tax wrapper the money sits inside.
- Trading commission
- What the broker charges to execute a trade. Almost every US broker moved to $0 on stocks and ETFs in 2019, which means the commission stopped being where the cost lives — look at what the platform earns instead.
- Advisory fee
- The yearly percentage a robo-advisor takes for choosing and rebalancing your portfolio, charged on your whole balance whether the market went up or down. It sits on top of the expense ratios of the funds it buys.
- Account minimum
- The smallest amount you need before the platform will open or manage an account for you. It is the single most common reason someone can't start, and it varies from $0 to several thousand dollars across otherwise similar products.
- Options contract fee
- A per-contract charge that survives the $0 commission era at most brokers, typically around $0.65. On a ten-contract trade it is the whole cost of the trade.
- Expense ratio
- The yearly slice a fund or ETF takes out of its own assets to run itself. You never see it billed — it comes out of the fund's return — and it applies on top of anything your platform charges.
- Traditional vs Roth
- Two ways of getting the tax break. A Traditional IRA may cut your taxable income the year you pay in, and you are taxed when you take it out. A Roth is paid in with money already taxed, and qualified withdrawals come out untaxed.
- Contribution limit
- The most the IRS lets you put into a retirement account in one tax year. It is a combined ceiling across your Traditional and Roth IRAs, not one limit each, and it changes most years.
- Catch-up contribution
- An extra amount the IRS lets you add on top of the normal limit once you reach a qualifying age. It replaces nothing — it is added to the standard limit for that year.
- Investment style
- Who decides what the account holds. A robo-advisor builds and rebalances a portfolio for you and charges a yearly percentage for it; a self-directed account leaves every choice, and every mistake, to you.
Something missing, or a definition that reads badly? Tell us. This page exists to be used, and every term on it appears somewhere on a product card — so if a definition does not help there, it is not doing its job.
Related reading
A definition tells you what a word means. These four take the terms this page gets asked about most and show them doing something.
- APR vs. APY: The One Letter That Tells You Who Is Paying WhomAPR is what borrowing costs you. APY is what saving pays you. They are calculated differently on purpose, and banks quote whichever one looks better — so knowing which is which is the cheapest financial skill you will ever pick up.Guide · 4 min read
- What Is APY, and Why It Matters More Than the Interest RateAPY (Annual Percentage Yield) is the actual return you'll earn on a savings account in a year, including compounding. It's the number to compare — not the interest rate alone.Guide · 3 min read
- How Credit Card APR Actually Works (And How to Make It Irrelevant)Your card's APR is an annual rate, but it is charged daily on whatever balance you carry past the due date. Pay the statement balance in full and you never touch it. Carry a balance and it becomes the most expensive number in your finances.Guide · 5 min read
- What Is the FDIC, and Is Your Money Actually Insured?The FDIC insures deposits at member banks up to $250,000 per depositor, per insured bank, for each account ownership category. Those three qualifiers are the whole rule — and they are also how a household can be covered for far more than $250,000 at one bank.Guide · 4 min read
Run the numbers
Knowing what APR and APY mean is the first half. These are the second.
- Compound Interest CalculatorSee how your money grows with compound interest — add contributions and compare to the S&P 500's real historical returns.
- Credit Card Payoff CalculatorSee how long paying only the minimum really takes, and how much an extra $50 or $100 a month saves.
- Mortgage Calculator (PITI + PMI)Estimate your monthly mortgage payment — principal, interest, property tax, insurance, and PMI.
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