Plain-language reference

Glossary

The money words that trip people up — defined in plain language, no assumptions. 50 terms and counting.

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50/30/20: A starting split of take-home pay: 50% needs, 30% wants, 20% savings and debt payoff. A guideline, not a law — adjust it to your reality.

ACH transfer: The bank-to-bank electronic network behind most direct deposits, bill payments, and account transfers. Free, but a day or two slower than instant.
APR: Annual Percentage Rate — the yearly cost of borrowing on the card, including interest. The number that makes cards comparable.
Available balance: The money you can actually spend right now — your ledger balance minus holds and pending charges. It's usually lower than the number at the top of the app.

Balance transfer: Moving debt from one card to another, usually chasing a lower promotional rate. Watch the transfer fee and what the rate becomes when the promo ends.

Credit counselor: A (usually nonprofit) advisor who helps you budget and manage debt — a different animal entirely from a for-profit debt settlement company.
Credit invisible: Having no file at all with the bureaus — common for young adults and recent arrivals, and a barrier to first credit.
Credit report: Your borrowing service history: accounts, balances, payment record, and public records, compiled by a reporting company.
Credit reporting company: A business that compiles and sells consumer files — the big three bureaus plus dozens of specialty firms.
Credit score: A number computed from your report to predict repayment risk. Different scoring models produce different numbers from the same file.
Credit utilization: Your balance as a share of your limit. Keeping it low helps your credit score.

Daily periodic rate: Your APR divided by 365 — the rate actually applied to your balance each day.
Debt collector: A business that collects debts owed to others — a hired agency or a buyer who purchased the debt outright.
Direct deposit: Your employer or benefits paying straight into the account electronically — faster than a paper check and often the key to waiving monthly fees.
Discretionary spending: The wants — eating out, subscriptions, entertainment. Not bad, but the first place to cut when the numbers don't work.

Elder financial exploitation: Illegal or improper use of an older adult's money or property — committed by strangers and, painfully often, by family or caregivers.

Fair Credit Reporting Act (FCRA): The federal law behind most of your rights here: access to your files, dispute rights, and limits on who can pull your report.
FDCPA: The Fair Debt Collection Practices Act — the federal law that limits what collectors can say and do.
Fiduciary: Someone legally managing money for another person — an agent under power of attorney, a trustee, a representative payee. Bound to act in that person's interest, and accountable when they don't.
Fixed expenses: Bills that stay roughly the same each month: rent, insurance, a phone plan. Easy to plan around because they don't move.
Foreclosure relief scam: Fake 'rescue' operations that target homeowners in trouble, charging fees for help that never comes — sometimes taking the deed itself.
Fraud alert: A flag on your file telling lenders to verify identity before opening accounts. Lighter than a freeze, easier to live with.

Garnishment: Taking payment directly from your wages or bank account — generally only possible after a court judgment.
Grace period: The window between your statement closing and the due date when paying in full means no interest on new purchases. Carry a balance and the grace period usually disappears.

Hard vs. soft inquiry: A hard pull (loan application) can nudge your score; a soft pull (checking your own report, prescreening) never does.

Imposter scam: A fraudster posing as someone you'd trust — the IRS, your bank, tech support, a grandchild in trouble. The costume varies; the ask for money or codes doesn't.

Judgment: A court ruling that you owe. It unlocks stronger collection tools like garnishment — which is why lawsuits must never be ignored.

Limited-content message: The tightly scripted voicemail a collector may leave that doesn't reveal the call is about a debt.

Minimum balance: A floor some accounts require you to keep to avoid a monthly fee. Drop below it and the fee — or a separate penalty — kicks in.

Original creditor: Whoever you first owed. Debts get sold down a chain; the caller may be far from the source, and the paperwork thins with every sale.
Overdraft: Spending past your available balance. Whether the bank covers it for a fee or declines it depends on choices you control.

Pay period: How often you get paid (weekly, biweekly, monthly). Budgeting per pay period instead of per month keeps cash from running out before the next check.
Pending transaction: A charge the bank sees but hasn't fully settled. It reduces your available balance before it posts, which is why a balance can shift overnight.
Phishing: Fake emails, texts, or sites built to harvest your passwords and account details. The tell is the link and the urgency, not the logo — logos are easy to fake.
Prescreened offer: A card offer mailed because a bureau matched you to the issuer's criteria. You can opt out of receiving them.

Regulation E: The federal rule that gives you error-and-fraud protection on electronic transfers and debit charges, and requires banks to investigate disputes you report in time.
Routing and account number: The two numbers that identify your bank and your specific account. Anything set up to pull from or push to your account needs both — guard them like a password.

Security freeze: A free lock on your file that blocks new-credit checks until you lift it. The strongest anti-identity-theft setting there is.
Sinking fund: Money set aside a little each month for a known irregular bill — car registration, holidays, an annual subscription — so it doesn't blow up the month it's due.
Specialty reporting company: Firms that keep non-bureau files: rental history, banking behavior, insurance claims, employment checks. All requestable.
Spoofing: Faking the caller ID or sender address so the contact looks legitimate. A call that displays your bank's name proves nothing.
Statute of limitations: The state-law deadline after which a collector can no longer sue over a debt. The debt doesn't vanish, but the courtroom door closes.

Take-home pay: What actually lands in your account after taxes and deductions — the number your budget is built on, not your salary.
Thin file: A file too sparse to score reliably. Not bad credit — just not enough history for the models to grade.
Trailing interest: Interest that shows up after you 'paid in full' — charged on the days between your last statement and the day your payment landed.

Unauthorized use: Charges you didn't make or approve. Federal law strictly limits what you can owe for them.

Validation notice: The written statement a collector must send showing what you owe, to whom, and how to dispute it. Your first checkpoint — read it before paying anything.
Variable expenses: Costs that change month to month: groceries, gas, utilities. These are where most budgets slip, so they're worth watching.

Wire transfer fraud: Scams that push you to wire money because wires are nearly impossible to reverse. Treat any urgent wire request as hostile until proven otherwise.

Zero-based budget: Every dollar is assigned until income minus everything equals zero. 'Zero' means fully planned, not empty.