Money Glossary

Financial writing is full of jargon that quietly excludes people. This glossary defines the terms we use in ordinary words — no circular definitions, no assuming you already know. If a term you've met on this site isn't here, tell us and we'll add it.

APR (Annual Percentage Rate)Loans

The yearly cost of borrowing including interest and most compulsory fees. Because it bundles fees in, APR is a fairer basis for comparing loans than the headline interest rate.

Avalanche methodDebt

A debt payoff strategy targeting the highest interest rate first, while paying minimums on everything else. Usually costs the least in total interest.

Balance transferDebt

Moving debt from one card to another, often at a lower promotional rate. Watch the transfer fee and what the rate becomes once the promotion ends.

BlockchainCrypto

A shared digital ledger maintained across many computers rather than by a single institution. It records transactions for cryptocurrencies and similar assets.

Brokerage accountInvesting

An account that lets you buy and hold investments such as shares, bonds and funds, rather than only cash.

CompoundingRetirement

When returns themselves earn returns. Given enough time this becomes the dominant force in long-term saving, which is why starting early matters so much.

Credit utilisationCredit

How much of your available credit you're using, as a percentage. Lower utilisation is generally viewed more favourably by scoring models.

Debt-to-income (DTI)Mortgages

Your monthly debt payments as a share of your income. Lenders use it to judge whether you can afford a new loan.

Deductible (excess)Insurance

The amount you pay yourself before the insurer pays anything on a claim. A higher deductible usually buys a lower premium.

Deposit protectionBanking

A government-backed guarantee covering your bank deposits up to a limit if the institution fails. Schemes include FDIC, FSCS, CDIC and equivalents.

DiversificationInvesting

Spreading money across many investments so no single one can badly damage your position. The core risk-management idea in investing.

ETF (exchange-traded fund)Investing

A fund holding a basket of investments that trades on an exchange like a share throughout the day.

Emergency fundSaving

Money set aside for unexpected, necessary costs such as job loss or urgent repairs. Kept accessible and separate from everyday spending.

ExclusionInsurance

Something a policy specifically does not cover. Exclusions are where cheap policies quietly differ from good ones.

Expense ratioInvesting

The annual percentage a fund charges to run itself. Small differences compound into large amounts over decades.

Gross payTaxes

Your earnings before any deductions. The figure quoted in a job offer, and always higher than what reaches your bank.

Index fundInvesting

A fund that tracks a market index rather than trying to beat it, typically at low cost. A common starting point for beginners.

Loan-to-value (LTV)Mortgages

The size of your mortgage relative to the property's value. A larger deposit means lower LTV, which usually unlocks better rates.

Money mulingOnline Income

Receiving money into your account and forwarding it for someone else. This is money laundering and a criminal offence, even when you were deceived.

Needs vs wantsBudgeting

The distinction between costs that keep your life running and discretionary spending. The basis of most budgeting methods.

Net payTaxes

Your take-home pay after tax, contributions and other deductions. This is the number your budget should be built on.

Origination feeLoans

An upfront charge some lenders apply for arranging a loan. It raises the true cost, which is why APR matters more than the headline rate.

PhishingScam Awareness

A fake message or website designed to harvest your login details or personal data by impersonating an organisation you trust.

Pre-approvalMortgages

A lender's conditional written indication of how much it would lend you, based on verified financial details. Not a final mortgage offer.

PremiumInsurance

What you pay for an insurance policy, monthly or annually. The most visible number on a quote, and the one people over-focus on.

Sinking fundBudgeting

Saving monthly towards a known irregular cost such as annual insurance or car servicing, so it doesn't wreck one month's budget.

Snowball methodDebt

A debt payoff strategy targeting the smallest balance first for quick wins and momentum, while paying minimums on everything else.

Sole traderBusiness

A self-employed person operating as an individual rather than through a company. Simplest business structure in many countries.

Two-factor authenticationScam Awareness

A second verification step beyond your password. One of the single most effective protections against account takeover.

VolatilityCrypto

How sharply and frequently a price moves. High volatility means large swings in short periods, which makes short time horizons risky.