Money glossary

APR, APY, amortization, escrow, debt-to-income and the rest of the money vocabulary — each explained plainly, with a worked example built from today's live national rates.

AmortizationHow a loan payment splits between interest and principal over time.APRThe yearly cost of borrowing, including most fees.APYWhat savings actually earn in a year once compounding is counted.Compound interestInterest earned on interest already earned.Debt-to-income ratioThe share of your gross monthly income that goes to debt payments.EscrowA lender-held account that pays your property tax and insurance.Interest rateThe price of money, before fees.Minimum paymentThe smallest card payment that keeps the account current.Prime rateThe bank rate that variable consumer debt is priced against.PrincipalThe amount you actually borrowed, separate from interest.RefinancingReplacing a loan with a new one on better terms.UnderwritingThe lender's check that you can repay.