Reference
Short definitions for terms that show up on statements, Loan Estimates, and savings pages. For deeper walkthroughs, open the linked guides. For live math, use the calculators.
A yearly rate that reflects interest and certain credit costs on a loan or card, expressed as a percentage. APR helps compare offers, but payment size still depends on term and fees financed into the loan.
See also: What APR means when you compare credit
The yearly return on a deposit account when compounding is included. APY is useful for comparing savings products; the advertised rate can change and is not a guarantee of future earnings.
See also: How APY shows up on savings
The schedule that splits each loan payment into interest and principal so the balance reaches zero by the final due date on a fully amortizing loan. Early payments are usually interest-heavy.
See also: How loan amortization works
An account your servicer may use to collect property tax and homeowners insurance with the mortgage payment, then pay those bills when due. Escrow amounts can re-check annually.
Insurance that protects the lender when a conventional loan starts with a smaller down payment. Borrowers often pay PMI until equity reaches a removal threshold defined by the loan rules.
See also: What PMI changes in your payment
The loan amount still owed, not counting interest. Paying extra principal (when allowed) usually shortens the schedule and reduces total interest.
Interest calculated on both the original balance and interest already added. On savings it can help balances grow; on credit cards it can make unpaid balances more expensive over time.
See also: Compound interest with contributions
A comparison of monthly debt obligations to gross monthly income. Lenders use DTI as one underwriting signal; calculators on this site do not replace a lender’s DTI rules.
A loan whose interest rate stays the same for the life of the term (or a defined fixed period). Payment for principal and interest stays predictable if the loan fully amortizes.
See also: Fixed vs adjustable mortgages
A mortgage that can change rate after an introductory period based on an index plus margin, within contract caps. Payment can rise or fall when the rate adjusts.
A withdrawal amount many retirement accounts require after you reach a certain age. Rules depend on account type and beneficiary status; this glossary is not tax advice.
See also: RMD basics for planning
Savings earmarked for a known future bill—insurance, tires, holiday travel—so the expense does not ambush next month’s budget or the emergency fund.
See also: Using sinking funds for big bills
What arrives in your account after taxes and deductions. Budgets built on gross pay usually overstate what you can spend.
See also: Gross pay vs take-home pay
The share of revolving credit limits you are using. High utilization can pressure scores even when you pay on time; paying down balances can help when other factors cooperate.
See also: How credit scores are built