Financial Glossary

APR measures what you pay to borrow. APY measures what you earn on savings, including compounding.

APY, or annual percentage yield, is the real annual return on savings once compounding is factored in.

An emergency fund is money set aside specifically to cover unplanned expenses or income gaps, kept separate from your everyday spending.

A HYSA, or high-yield savings account, pays a meaningfully higher interest rate than a traditional bank savings account, usually offered by online banks.

An NSF fee, short for non-sufficient funds, is what your bank charges when a payment is returned because your account did not have enough money to cover it.

APR, or annual percentage rate, is the yearly cost of borrowing money, expressed as a percentage of the balance you carry.

A credit card grace period is the window between your statement closing and your payment due date during which purchases carry no interest, as long as you paid last month’s balance in full.

Credit utilization is the percentage of your available credit you are currently using, and it is one of the biggest factors in your credit score.

The debt avalanche method pays off debts in order of highest interest rate first, which minimizes the total interest you pay.

The debt snowball method pays off debts in order of smallest balance first, building momentum through early wins.

A 401(k) employer match is money your employer adds to your retirement account, tied to how much of your own paycheck you contribute.

DTI is the percentage of your gross monthly income that goes toward debt payments, and lenders use it to decide how much you can borrow.

PMI is insurance that protects your lender, not you, required on most conventional mortgages when your down payment is under 20%.