Money words, explained in plain English
Thirty everyday money words you'll see on pay stubs, bank apps, card statements and credit reports, explained without jargon.
- 401(k)
- A retirement savings account offered through an employer. Contributions often come out of your paycheck before tax, and some employers add a match.
- Annual fee
- A yearly charge some credit cards and memberships make just for having the account.
- APR (annual percentage rate)
- The yearly cost of borrowing, including interest and some fees. Higher APR means more expensive debt.
- APY (annual percentage yield)
- What a savings account earns in a year, including compounding. Higher APY means more interest for you.
- Authorized user
- Someone allowed to use another person's credit card. The account may show on their credit report too.
- Autopay
- An automatic payment from your bank account on a set date. Useful for making sure you never miss a minimum payment.
- Balance
- The amount in an account, or the amount you owe on a card or loan.
- Collections
- When an unpaid debt is passed to a collection agency. It can appear on your credit report.
- Credit bureau
- A company that keeps credit reports. The three nationwide bureaus are Equifax, Experian and TransUnion.
- Credit freeze
- A free block that stops new lenders from seeing your credit report, which helps prevent identity theft.
- Credit limit
- The most you can borrow on a credit card.
- Credit report
- A record of your credit accounts, balances and payment history. Free every week at AnnualCreditReport.com.
- Credit score
- A number calculated from your credit report that lenders use to judge risk. There are several scoring models.
- Credit utilization
- Your card balances divided by your credit limits, shown as a percentage.
- Debit card
- A card that takes money directly from your checking account. It doesn't build credit.
- Deductible
- What you pay for covered costs before your insurance starts paying.
- Direct deposit
- Your pay sent straight to your bank account.
- FDIC / NCUA insurance
- Federal insurance that protects deposits at insured banks (FDIC) and credit unions (NCUA), up to legal limits.
- FICA
- Social Security and Medicare taxes taken from your pay.
- Gross pay
- What you earn before taxes and deductions.
- Hard inquiry
- A credit check when you apply for credit. It can lower a score slightly for a while.
- Interest
- What you pay to borrow money, or earn on money you save.
- Minimum payment
- The smallest amount you must pay on a card each month to avoid a late fee. Paying only the minimum means paying more interest.
- Net pay
- Take-home pay: what reaches your account after taxes and deductions.
- Overdraft
- Spending more than is in your checking account. It can lead to fees or declined payments.
- Secured credit card
- A card backed by a deposit you pay up front, often used to build credit.
- Soft inquiry
- A credit check that doesn't affect your score, such as checking your own credit.
- Statement balance
- What you owed on a card at the end of the billing cycle. Paying it in full by the due date usually avoids interest.
- W-2
- The form your employer sends each year showing your pay and the taxes withheld.
- W-4
- The form you give your employer to set how much federal income tax is withheld from your pay.
Go deeper
Start with how to read your pay stub or your credit reports, explained, or tick off the Money Basics checklist.
General educational information, not financial or tax advice.