Unit 4 Vocab – Banking, Credit, and Risk


  1. Bank – A financial institution where people keep money, deposit checks, withdraw cash, and get loans.

  2. Credit Union – A member-owned financial institution that provides services like savings accounts and loans.

  3. Checking Account – An account used for everyday spending and payments.

  4. Savings Account – An account designed to store money and usually earn interest.

  5. Deposit – Money put into a bank account.

  6. Withdrawal – Money taken out of a bank account.

  7. Transfer – Moving money from one account to another.

  8. Debit Card – A card that takes money directly from your bank account when you make a purchase.

  9. Credit – Money borrowed that must be repaid, usually with interest.

  10. Credit Report – A record of your borrowing and repayment history.

  11. Credit Bureau – A company that collects and maintains information about consumers’ credit history.

  12. Credit Score/FICO – A number that represents how likely you are to repay borrowed money.

  13. Debt-to-Income Ratio (DTI) – The percentage of your income that goes toward paying debt.

  14. Credit Card – A card that lets you borrow money to make purchases and repay it later.

  15. Revolving Credit – Credit that can be borrowed, repaid, and borrowed again up to a limit.

  16. Annual Percentage Rate (APR) – The yearly cost of borrowing money, expressed as a percentage.

  17. Interest – Money charged for borrowing money or earned for keeping money in an account.

  18. Fees – Extra charges for certain financial services or actions.

  19. Creditworthiness – How trustworthy you appear to lenders based on your ability and history of repaying debt.

  20. Cash Flow – The money coming into and going out of your finances.

  21. Minimum Payment – The smallest amount you must pay toward a credit card balance each month.

  22. Installment Loan – A loan repaid through regular payments over a set period of time.

  23. Repayment – Paying back money that you borrowed.

  24. Collateral – Property that a lender can take if a borrower fails to repay a secured loan.

  25. Debt – Money that you owe to another person or organization.

  26. Payday Loan – A short-term, high-cost loan typically based on your upcoming paycheck.

  27. Auto Loan – A loan used to purchase a vehicle.

  28. Lease – An agreement that allows you to use something for a specific period in exchange for payments.

  29. Mortgage – A loan used to buy a house or other real estate.

  30. Fixed-Rate Mortgage – A mortgage with an interest rate that stays the same throughout the loan.

  31. Variable-Rate Mortgage – A mortgage whose interest rate can change over time.

  32. Down Payment – The amount of money paid upfront when purchasing something, especially a house or car.

  33. Private Mortgage Insurance (PMI) – Insurance that protects the lender when a borrower has a smaller down payment on a conventional mortgage.

  34. Asset – Something you own that has financial value.

  35. Liability – Money or financial obligations that you owe.

  36. Net Worth – The value of what you own minus what you owe.

  37. Insurance – Protection against financial loss from unexpected events.

  38. Premium – The amount you pay for insurance coverage.

  39. Deductible – The amount you must pay yourself before insurance begins paying covered expenses.