| Interest that is computed at the beginning of the loan, then added to the principal, so that all must be repaid, even if the loan is paid off early. |
| Extra money included with a loan payment to pay off the amount owed faster. Over time, this practice reduces the amount of interest paid. |
| A method used by some card issuers where they subtract all payments made during the month, then add the finance charges. |
| The amount of money that is financed. This could include the cost of the purchase and other items rolled into the payments. |
| A bank charge for use of a credit card levied each year, which can range from $15 to $300, billed directly to the customer's monthly statement. Many credit cards come without an annual fee. |
| A yearly rate of interest that includes fees and costs paid to acquire the loan. Lenders are required by law to disclose the APR. The rate is calculated in a standard way, taking the average compound interest rate over the term of the loan, so borrowers can compare loans. In mortgages, it is the interest rate of a mortgage when taking into account the interest, mortgage insurance, and certain closing costs including points paid at closing. There is no APR in an automobile lease; instead, the cost of money is expressed as the money factor. |
| An arrangement that authorizes periodic withdrawals to be made from a checking or savings account to pay bills, usually regular monthly payments such as for rent or mortgages. |
| An injunction that stops lawsuits, foreclosure, garnishments and all collection activity against the debtor the moment a bankruptcy petition is filed. |
| An arrangement that moves money at certain specified times, often monthly, from an interest bearing or savings account into a non-interest, usually checking, account for the payment of checks or other drafts. |
| This is the method by which most credit cards calculate your payment due. Adding each day’s balance and then dividing that total by the number of days in a billing cycle determine an average daily balance. |
