PA Vocabulary PFL Simple & Compound Interest

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401(k)

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A Retirement account where money is invested Pre-taxed

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529 account

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Educational savings account managed by the state, and is usually tax-deferred

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Annual percentage rate (APR)

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Annual percentage rate applied to the balance on a loan compounded monthly

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Annuity

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Deductible and non-deductible contributions may be made, taxes may be waived if used for higher education

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Car title loan

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A high-interest, short term loan of cash for which an automobile title is required as collateral

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Check

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A way to pay for things from a checking account, using a written document

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Collateral

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Something you offer in exchange for credit, so that if you don't pay what you owe, they can keep it.

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Compound interest for a loan or investment

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Interest that is calculated on the latest balance, including all compounded interest that has been added to the original loan or investment principal

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Credit

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Buying or obtaining goods or services now with an agreement to pay in the future

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Credit card

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A card that can be used to borrow money from financial institutions, stores, or other businesses in order to buy products and services on credit