Unit 2: Personal Finances - Banking, Borrowing, and Money Management

Vocabulary flashcards covering core banking terminology, loan concepts, borrowing terms, and budgeting strategies from Unit 2: Personal Finances.

current account

An account designed for everyday payments and frequent transactions.

savings account

An account used to set money aside for future goals.

direct deposit

Wages or other income sent straight into an account.

maintenance fee

A regular charge for keeping an account open.

overdraft

Spending more money than an account actually holds.

fee schedule

A list showing all of a bank's charges and what each one costs.

verification code

A one-time number sent to confirm that you are the person using an account.

transaction

A single payment, transfer or withdrawal.

minimum balance

The lowest amount that must stay in an account to avoid a charge or qualify for a benefit.

statement

A regular document listing the money paid into and out of an account.

principal

The original amount of money borrowed.

interest

The charge for using the lender's money.

annual percentage rate (APR)

A measure that combines interest with certain fees to help applicants compare loan offers.

repayment term

The agreed period of time allowed to repay a loan.

instalment

A regular, often monthly payment due as part of a loan repayment schedule.

secured loan

A loan backed by an asset (such as a car or property) that the lender may have the right to claim if repayments stop.

collateral

An asset pledged against a loan to protect the lender if repayments stop.

unsecured loan

A loan that does not use specific collateral, which may carry a higher interest rate because the lender faces more risk.

stress-test

To evaluate a budget before borrowing by checking whether repayments could still be made if income fell, rent increased, or an urgent repair arose.

transparent

Describing a contract that explains every fee and condition clearly in plain language.

cash flow

The timing and movement of money, reflecting the dates on which income arrives and bills are due.

account buffer

A small amount of money kept in an account to reduce the chance of an overdraft or a late fee when payments fall before payday.

automatic transfer

A scheduled transfer that moves money into savings soon after payday before other spending absorbs it.

emergency fund

A reserve designed for necessary costs that are difficult to predict, such as an urgent repair or a sudden medical bill.

creditor

A person or organisation that is owed money.

momentum

The force that keeps progress moving forward, such as the motivation gained from clearing a smaller debt balance first.

subscription

A regular recurring payment made for access to a service.