Glossary · Tender Reserve

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APR — annual percentage rate: The yearly cost of borrowing money, written as a percent. It includes the interest plus most fees. APR is what you actually pay; the headline interest rate often isn’t.
Authorized user: Someone who can spend on another person’s credit card. The card’s history can show up on the authorized user’s credit report — useful for building credit if the primary holder is responsible.

Charge-off: What a lender calls a debt they’ve given up on collecting and written off as a loss. The debt itself doesn’t disappear — it usually gets sold to a collection agency.
Co-signer: Someone who agrees to repay a loan if the primary borrower doesn’t. Co-signing isn’t a favor; if the borrower misses payments, the co-signer’s credit takes the hit.
Compound interest: Interest earned on both the original amount and on previously earned interest. The mechanism behind ‘time in the market’ arguments — money invested early earns on its own returns later.

Debt avalanche: A debt-payoff method that pays highest-interest debts first. Mathematically optimal — saves the most money — but harder to stick with than the snowball method.
Debt snowball: A debt-payoff method that pays smallest balances first regardless of interest rate. Mathematically suboptimal but psychologically motivating because of the early wins.

Emergency fund: Money set aside specifically for unexpected expenses — a job loss, medical bill, car repair. Usually three to six months of expenses, in a high-yield savings account.

FICO score — Fair Isaac Corporation: The most widely used credit score in the U.S. It runs from 300 to 850 and is calculated from data the three credit bureaus collect on your borrowing.

Hard inquiry: A lender pulling your credit report when you apply for credit. Hard inquiries can lower your score by a few points and stay on your report for two years.
High-yield savings account — HYSA: A savings account that pays a meaningful interest rate. Almost always online-only banks. The ‘high’ is relative to a typical brick-and-mortar bank’s near-zero rate.

Index fund: A fund that owns a slice of every company in a market index, like the S&P 500. Cheap to run, broad, and the most evidence-based default investment for most people.
Installment loan: A loan you pay back in fixed monthly payments over a set period — student loans, mortgages, auto loans. The opposite of revolving credit (like a credit card).

Revolving credit: Credit you can use, repay, and use again — credit cards, home-equity lines. Distinct from installment loans, which have a fixed payback schedule.
Roth IRA — individual retirement account: A retirement account where you pay tax on the money going in, but pay no tax on the gains coming out. Best when you expect to be in a higher tax bracket later.

Secured card: A credit card backed by a deposit you put down. Used for building credit when a regular card isn’t available. The deposit is refundable.
Soft inquiry: A look at your credit that doesn’t affect your score — checking your own score, pre-approved offers, employer background checks. Lenders see soft inquiries differently from hard ones.
Statement balance: The amount you owe at the end of a billing cycle, before any new charges. Paying the statement balance in full each month avoids interest.

Tax bracket: The marginal rate at which the next dollar you earn is taxed. Brackets are progressive — moving into a higher bracket doesn’t tax all your income at the higher rate, only the part above the threshold.

Utilization: The share of your available credit you’re using, expressed as a percent. Lower is better; under 30% is the common rule of thumb, but under 10% is what high scores tend to show.

VantageScore: An alternative to the FICO score, created by the three credit bureaus. Same 300–850 range but a slightly different formula. Most lenders still use FICO.

Withholding: Money your employer takes out of your paycheck and sends to the IRS on your behalf. If too much is withheld, you get a refund — but the refund isn’t a bonus; it was your money.