Reference
Glossary
US personal finance has a vocabulary of acronyms, half-defined rules, and issuer- specific jargon that obscures more than it should. This glossary defines the terms the way they actually work in 2026 — with primary-source anchors (CFPB, FDIC, FRB, IRS, FICO, FINRA, SEC, NCUA) and a "Last updated" date on every entry.
76 entries
6 topics
~350-600 words per term
Primary sources only
The glossary is organized by the five topics that structure finbarrow. Each entry is a self-contained article — typically 350–600 words — covering the definition, how it works mechanically, common misconceptions, the relevant US regulatory or industry context, and links to deeper coverage in the topic it belongs to.
New entries are added as articles in each topic need them. Existing entries are reviewed at least every 12 months for accuracy; rate- or rule-sensitive entries (FICO factor weights, IRS contribution limits, FDIC insurance amounts) are reviewed quarterly. Where a term has different meanings across contexts, we cover the variants under sub-headings rather than splitting into separate entries.
Credit Cards
17 terms- 90 Days Same as Cash "90 Days Same as Cash" is a deferred-interest promotion common in furniture, electronics, and medical financing: pay the full balance within the promotional window and you owe no interest, but miss it by even a dollar and the lender charges the entire interest that accrued from day one — retroactively, on the original purchase amount.
- Annual fee (credit card) A flat yearly fee an issuer charges for an account regardless of usage. Common on rewards and premium cards, where the math is whether the rewards earned plus statement credits used exceed the fee. The fee is non-negotiable for most cardholders, but issuer retention offers can sometimes waive or refund it.
- APR (Annual Percentage Rate) APR is the annualized cost of borrowing, expressed as a percentage, that includes both the nominal interest rate and certain mandatory fees. For credit cards, it is essentially the interest rate; for installment loans, it bundles in origination fees and points.
- AZEO (All Zero Except One) A pre-application FICO optimization tactic: pay down all credit card balances to report at zero on the statement closing date except one, which reports a small positive balance (1–9% of its limit). Frequently boosts FICO 10–40 points temporarily.
- Balance transfer Moving debt from one credit card to another card — usually one offering a promotional 0% APR window — to save on interest. Subject to a balance transfer fee (typically 3–5% of the transferred amount) and conditions about how long the promo rate lasts.
- BNPL (Buy Now, Pay Later) Point-of-sale installment financing splitting a purchase into 3-4 interest-free payments over 6-8 weeks. Major US providers (Affirm, Klarna, Afterpay, PayPal Pay in 4) extend credit at checkout via soft pull approval.
- Cash back A rewards structure that earns a percentage of each purchase back as a cash equivalent — typically 1–6% — paid as a statement credit, direct deposit, or check. The most straightforward credit card rewards format; the right choice for cardholders who do not value points or miles for travel.
- Cents per point (cpp) Cents per point is the standard metric for evaluating how much value a credit card reward point is worth when redeemed. A point redeemed for a $10 flight that normally costs 1,000 points is worth 1.0 cpp ($10 ÷ 1,000 = $0.01).
- Chase 5/24 rule An unwritten Chase application policy: if you have opened five or more credit cards (from any issuer) in the previous 24 months, most Chase cards will be automatically denied regardless of credit profile. The rule is the most discussed gating constraint in US credit card optimization.
- Chase trifecta A three-card combination of Chase consumer credit cards (Freedom Flex + Freedom Unlimited + Sapphire Preferred or Reserve) that pools all earnings into Chase Ultimate Rewards points, the most flexible US transferable-points currency for domestic and international travel redemptions.
- Foreign transaction fee A surcharge of typically 1–3% added by your credit card issuer to any purchase that involves currency conversion or a non-US merchant. The reason competitive travel-rewards cards explicitly advertise "no foreign transaction fees" — and the reason most cash-back cards are a poor choice for international travel.
- Grace period The grace period is the window — at least 21 days under the CARD Act — between the statement closing date and the payment due date during which no interest accrues on new purchases, provided the prior statement balance was paid in full.
- MSR (Minimum Spend Requirement) MSR is the amount of qualifying spending a new cardholder must complete within a defined window — usually 3 months — to unlock the credit card sign-up bonus. Failing to hit the MSR forfeits the bonus entirely.
- Retention offer An incentive — typically a statement credit, bonus points, or annual fee waiver — that a credit card issuer offers to a cardholder threatening to cancel an annual-fee card. The offer is not displayed to all cardholders and must usually be requested by calling the issuer.
- Sign-up bonus A one-time reward — points, miles, or cash — that a credit card issuer pays a new cardholder for meeting a minimum spend requirement within a defined window. The most economically important feature of a new card; the bonus typically exceeds five years of ongoing rewards on the same spend.
- Statement credit A direct reduction in your credit card balance, applied as a negative charge on the statement. The most common form for cash-back redemptions and the typical mechanism for credit card sign-up bonus payouts denominated in dollars rather than points.
- Travel rewards A rewards structure that earns points or miles redeemable for travel — flights, hotels, car rentals — sometimes at substantially higher cents-per-point value than cash back, particularly through airline or hotel transfer partners. Higher upside than cash back, with more operational complexity.
Savings & CDs
10 terms- APY (Annual Percentage Yield) The actual annualized return on a deposit account, taking compounding into account. Distinguishes meaningfully from "interest rate" only on accounts with intra-year compounding — which is virtually all US deposit accounts.
- Cash sweep A cash sweep is the automatic mechanism that moves uninvested cash in a brokerage account into an interest-bearing position — either a bank deposit (FDIC-insured) or a money market fund (SIPC-covered) — at the end of each business day.
- CD (Certificate of Deposit) A federally insured deposit product at a US bank or credit union where you commit funds for a fixed term — typically 3 months to 5 years — in exchange for a fixed APY. Early withdrawal triggers a penalty, usually 90 days to 12 months of interest depending on the term.
- CD ladder A CD ladder is a savings strategy that staggers certificate-of-deposit maturity dates so that one CD matures at regular intervals, providing both the higher yield of longer-term CDs and the liquidity of short-term access to a portion of the funds.
- CPI-U (Consumer Price Index for All Urban Consumers) The Bureau of Labor Statistics inflation index covering ~93% of the US population, used for cost-of-living adjustments on Social Security, federal tax brackets, IRA/401(k) contribution limits, I-bond variable rates, and most private-sector inflation indexing.
- FDIC insurance The Federal Deposit Insurance Corporation insures US bank deposits up to $250,000 per depositor, per insured bank, per ownership category. The structural guarantee that makes savings, checking, money market, and CD accounts at insured banks effectively risk-free up to the limit.
- HYSA (High-Yield Savings Account) A federally insured savings account at an online or hybrid US bank that pays a competitive APY — typically 10–20× the rate of legacy branch banks. The most underused high-ROI personal finance lever for most US households.
- Money market account (MMA) A federally insured deposit account at a US bank that pays a competitive APY similar to a HYSA but may include limited check-writing or debit-card privileges. Distinct from a money market fund, which is a brokerage product and is not FDIC-insured.
- NCUA insurance The National Credit Union Administration's National Credit Union Share Insurance Fund insures deposits at federal credit unions up to $250,000 per share owner, per insured credit union, per ownership category — structurally identical to FDIC insurance, applied to credit union shares.
- TreasuryDirect TreasuryDirect is the US Treasury Department's online platform for buying, managing, and redeeming Treasury securities — T-bills, T-notes, T-bonds, TIPS, I-bonds, and EE bonds — directly from the government without a broker or intermediary.
Investing & Retirement
14 terms- 401(k) An employer-sponsored defined contribution retirement plan governed by Internal Revenue Code Section 401(k), allowing employees to defer pre-tax compensation (Traditional 401(k)) or post-tax compensation (Roth 401(k)) into investment options selected by the plan. The largest US retirement savings vehicle by assets.
- Bank-Qualified (Municipal Bonds) A bank-qualified municipal bond is a tax-exempt bond issued by a small government issuer — one expecting to issue no more than $10 million of tax-exempt debt in a calendar year — that lets a bank holding it deduct 80% of the carrying cost. The designation is a niche but real driver of demand and pricing in the small-issuer corner of the muni market.
- Capital gains tax rate Federal tax rates that apply to profits from selling assets held in a taxable account. Long-term gains (held >1 year) are taxed at preferential rates (0%, 15%, or 20% depending on income); short-term gains (≤1 year) are taxed as ordinary income at marginal brackets.
- Dollar-cost averaging (DCA) An investing approach where a fixed dollar amount is invested at regular intervals regardless of market price. Results in buying more shares when prices are low and fewer when prices are high, smoothing the average cost basis over time.
- ETF (Exchange-Traded Fund) A pooled investment vehicle that trades on a stock exchange like an individual security but holds an underlying portfolio of stocks, bonds, or other assets — typically tracking an index. Combines mutual fund diversification with stock-style intraday trading.
- Expense ratio The annual fee a mutual fund or ETF charges its shareholders, expressed as a percentage of assets under management. Subtracted directly from fund returns daily before NAV is calculated. The single most predictive variable in fund performance over long horizons.
- HDHP (High-Deductible Health Plan) A High-Deductible Health Plan is a US health insurance plan with a minimum deductible and a maximum out-of-pocket limit set annually by the IRS. Enrollment in an HDHP is the eligibility gate for contributing to a Health Savings Account.
- HSA (Health Savings Account) A Health Savings Account is a US tax-advantaged account paired with a qualifying high-deductible health plan. Contributions are pre-tax, growth is tax-free, and qualified medical withdrawals are tax-free — the only triple-tax-advantaged structure in the US tax code.
- Index fund A mutual fund or ETF that aims to replicate the performance of a stated market index — the S&P 500, the total US stock market, a total international stock market, or an aggregate bond index — by holding the index's constituent securities in their index weightings. Typically the lowest-cost and broadest-exposure way to access a market.
- Mega backdoor Roth A 401(k) strategy where an employee contributes after-tax dollars beyond the standard employee deferral limit and converts them to Roth, either inside the plan or via in-service withdrawal to a Roth IRA. Can add up to approximately $47,500 of additional Roth contributions per year for employees of plans that permit it.
- Qualified dividend A dividend that meets specific IRS holding-period and source requirements and qualifies for the preferential long-term capital gains tax rate (0%, 15%, or 20%) instead of the higher ordinary income rate. Reported on Form 1099-DIV box 1b — the subset of total dividends in box 1a that qualified.
- Roth IRA An Individual Retirement Account funded with post-tax dollars where contributions are not tax-deductible, growth is tax-free, and qualified withdrawals after age 59½ are tax-free. Subject to annual contribution limits and income-based phase-outs.
- Traditional IRA An Individual Retirement Account funded with pre-tax dollars (deductible up to income limits if a workplace retirement plan is available) where growth is tax-deferred and withdrawals in retirement are taxed as ordinary income. Required Minimum Distributions begin at age 73.
- Wash sale rule An IRS rule that disallows a tax loss on the sale of a security if the same or a 'substantially identical' security is purchased within 30 days before or after the loss sale. The disallowed loss is added to the cost basis of the replacement security.
Loans & Mortgages
15 terms- ARM (Adjustable-Rate Mortgage) A mortgage with an interest rate that adjusts periodically based on a stated index plus a margin, typically after an introductory fixed-rate period of 5, 7, or 10 years. Lower initial rate than comparable fixed mortgages, with rate-reset risk on a schedule.
- CLTV (Combined Loan-to-Value) The total of all liens against a property divided by the property's appraised value. Used by lenders to assess risk when a second-lien product (HELOC, home equity loan) is being underwritten on a home that already has a first mortgage.
- Discretionary Income In the federal student loan system, discretionary income is a defined figure — your adjusted gross income minus a multiple of the federal poverty guideline for your household size — that serves as the base on which income-driven repayment plans compute your monthly payment. It is a statutory formula, not "money left over after expenses."
- DTI (Debt-to-Income) The ratio of a borrower's monthly debt payments to gross monthly income, expressed as a percentage. The primary qualifying gate for most US loans — particularly mortgages, where guidelines typically cap front-end DTI at 28–31% and back-end DTI at 43–50%.
- First Payment Default (FPD) First Payment Default is when a borrower fails to make the very first scheduled payment on a newly originated loan. Because a brand-new borrower defaulting immediately rarely reflects ordinary financial hardship, lenders treat FPD as a leading red flag for fraud or flawed underwriting rather than as routine delinquency.
- HELOC (Home Equity Line of Credit) A revolving line of credit secured by home equity, typically with a 10-year draw period at variable Prime+margin rates followed by a 10-20 year repayment period. The most flexible home-equity tap and the dominant choice post-2022 versus cash-out refi.
- IDR (Income-Driven Repayment) plans Federal student loan repayment plans capping monthly payments at a percentage of discretionary income, with forgiveness of remaining balance after 20-25 years. Required vehicle for Public Service Loan Forgiveness.
- LTV (Loan-to-Value) The ratio of a loan's principal balance to the appraised value of the underlying collateral, expressed as a percentage. The primary determinant of PMI eligibility, mortgage refinance access, and rate tiering for most secured loan products.
- Mortgage A loan secured by real estate, used to finance the purchase or refinance of a home. The largest single loan most US households will ever take, typically with a 15- or 30-year amortization, fixed or adjustable rate, and various government-backed or conventional structures.
- Origination fee A lender fee charged at the time of loan origination, typically expressed as a percentage of the loan principal (commonly 0.5% to 2.0% on mortgages, 1% to 8% on personal loans). Included in APR but not in the headline interest rate.
- PMI (Private Mortgage Insurance) Private mortgage insurance is an insurance policy required on conventional US mortgages where the borrower puts down less than 20% of the home's value. The borrower pays the premium, but the policy protects the lender against default loss, not the borrower.
- PSLF (Public Service Loan Forgiveness) Public Service Loan Forgiveness is a US federal program that forgives the remaining balance on Direct federal student loans after 120 qualifying monthly payments made while employed full-time by a qualifying public-service employer.
- Refinance Replacing an existing loan with a new one — typically to lower the rate, change the term, switch from variable to fixed rate, or extract equity (cash-out refinance). Subject to closing costs that must be recouped through the rate savings to make the refi worthwhile.
- SAVE Plan A federal student loan income-driven repayment plan enacted in 2023 to replace REPAYE. Uses 5% of discretionary income for undergraduate loans (10% for graduate) and a more generous discretionary income definition (225% of federal poverty level). Subject to ongoing court litigation.
- True Interest Cost (TIC) True Interest Cost is the all-in cost of a loan once every fee, point, and charge is folded into the rate the borrower actually pays — not the headline nominal rate the lender advertises. It is the conceptual cousin of APR: both answer the question "what does this debt really cost me?" rather than "what is the sticker rate?"
Credit & FICO
7 terms- Credit freeze (security freeze) A no-cost lock on your credit file at each of the three major US credit bureaus that prevents new lenders from accessing the file, blocking new credit account opening until temporarily or permanently lifted. Free at all three bureaus since 2018.
- Credit utilization The ratio of revolving credit balances to revolving credit limits, expressed as a percentage. Both aggregate utilization (across all cards) and per-card utilization matter. The second-largest FICO factor (30%) and the lever most readily adjustable in 30–60 days.
- FCRA (Fair Credit Reporting Act) The 1970 federal law that regulates how consumer reporting agencies collect, share, and report consumer credit information. The legal backbone of credit-report accuracy, dispute rights, and the 7-year reporting limit on most negative information.
- FICO Score The 300–850 credit score produced by the Fair Isaac Corporation's scoring models. The score model used by the majority of US lenders for consumer credit underwriting. Calculated from bureau data on payment history, amounts owed, length of credit history, credit mix, and new credit.
- Hard pull A lender-initiated credit inquiry triggered by an application for new credit. Appears on your credit report, typically lowers FICO by 2–5 points for 12 months, and ages off entirely after 24 months.
- Metro 2 format Metro 2 is the standardized data format that creditors and collectors (furnishers) use to report your accounts to Experian, Equifax, and TransUnion. Every line on your credit report begins as a Metro 2 field — including the Date of First Delinquency that sets the 7-year clock.
- VantageScore A competing US credit scoring model developed jointly by the three major credit bureaus (Equifax, Experian, TransUnion). Used heavily in marketing scores, Credit Karma, and increasingly by some lenders. Different methodology from FICO; scores commonly differ by 20–50 points for the same consumer.
Taxes
13 terms- Additional Medicare Tax A 0.9% federal surtax on wages, self-employment income, and railroad retirement compensation above filing-status thresholds ($200,000 single / $250,000 MFJ / $125,000 MFS). Enacted by the Affordable Care Act in 2010. Thresholds are not indexed for inflation.
- AGI (Adjusted Gross Income) AGI is your total gross income for the tax year minus a specific set of statutory adjustments listed on Schedule 1 of Form 1040. It is the figure on which most tax calculations and eligibility tests downstream actually operate — not your gross income, not your taxable income.
- COLA (Cost of Living Adjustment) The annual inflation-based adjustment applied to dollar amounts in the federal tax code, retirement contribution limits, Social Security benefits, and other indexed thresholds. Computed from a specified CPI-U window each year.
- FICA (Federal Insurance Contributions Act) The combined Social Security (6.2%) and Medicare (1.45%) tax withheld from W-2 wages by employers, matched by an equivalent employer contribution. For 1099 self-employed income, the same tax appears as 15.3% self-employment tax on Schedule SE.
- Form 1040 (US Individual Income Tax Return) The primary federal individual income tax return that every US individual filer submits each year. Reports income from all sources, applies deductions and credits, and arrives at federal income tax owed or refund due. The single form that the IRS expects from over 165 million filers annually.
- MAGI (Modified Adjusted Gross Income) MAGI is your AGI with specific deductions and exclusions added back in. The exact items added back depend on which tax provision is testing eligibility — there is no single universal MAGI. The two most commonly encountered versions are the IRA-deduction MAGI and the Premium Tax Credit MAGI.
- NIIT (Net Investment Income Tax) A 3.8% federal surtax on investment income for higher-income filers, enacted in 2013 to fund the Affordable Care Act. Applies on top of regular capital gains and dividend tax when modified AGI exceeds $200,000 (single) or $250,000 (married filing jointly). Thresholds are not indexed for inflation.
- OASDI wage base (Social Security wage base) The maximum amount of wages subject to the 6.2% Social Security (OASDI) payroll tax each calendar year. $184,500 in 2026 (up from $176,100 in 2025), adjusted annually by the Social Security Administration based on national average wage growth. The Medicare portion of FICA has no wage base.
- QBI deduction (Qualified Business Income deduction, IRC § 199A) A federal deduction of up to 20% of qualified business income from pass-through entities (sole proprietorships, partnerships, S corporations, qualifying trusts) available regardless of whether the filer takes the standard or itemized deduction. Phase-outs apply at higher income levels.
- SALT cap (state and local tax deduction limit) The federal cap on the Schedule A deduction for combined state and local taxes paid (income, sales, property). Set at $10,000 by the Tax Cuts and Jobs Act of 2017 and temporarily raised to $40,000 for 2025–2029 by the One Big Beautiful Bill Act, it is the single largest swing factor in the itemizing decision for high-state-tax homeowners.
- Saver's Credit (Retirement Savings Contributions Credit) The Saver's Credit is a non-refundable federal tax credit worth 10%, 20%, or 50% of the first $2,000 of retirement contributions ($4,000 for married filing jointly), available to low-to-moderate income filers who contribute to a 401(k), IRA, or similar retirement account.
- Schedule SE (Self-Employment Tax) The IRS form that computes self-employment tax — the self-employed equivalent of FICA — at a combined 15.3% on net earnings from self-employment, half of which is deductible above the line.
- Standard deduction The flat dollar amount the IRS lets every filer subtract from AGI to arrive at taxable income, regardless of actual expenses. Indexed annually for inflation and varies by filing status. The default choice for ~90% of US households post-2017.