Economics and Finance Basics

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credit card

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A card that lets the user buy goods and services with funds they don't have.

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debit card

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A card that lets the user spend their funds from their bank account. It can be used to buy goods or services or to withdraw money directly from an account.

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saving

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Setting aside a portion of income for use in the future

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interest

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The extra price paid for borrowed money

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diversification

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A method of lowering risk by investing in different financial assets.

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loan

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A lender gives money to a borrower, who agrees to repay the money (with interest) at some point in the future.

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credit

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What allows a person to borrow money. Also affects interest rates.

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commercial loans

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Loans used for businesses.

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consumer loans

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Loans for personal, large expenses.

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mortgage

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A loan used to buy property, usually a house.