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What is Compound Interest?

Compound interest is interest that accrues on an amount of money plus the accumulated interest on that money. Compound interest helps money grow faster than simple interest which is calculated as a percentage of only the original amount.    See...

What is a Coverdell Education Savings Account (ESA)?

Formerly called an "Education IRA," a Coverdell Education Savings Account allows families to save money on a tax-deferred basis for primary and secondary education expenses for children under the age of 18. However, the maximum annual contribution...

What is a CPA?

A Certified Public Accountant (CPA) is a tax and accounting professional who has completed a certain amount of education and passed the official CPA exam and received state certification to get paid to practice. CPAs are required to complete a...

What is a Credit Bureau?

Also referred to as a "consumer reporting agency," a credit bureau collects and sells information about the creditworthiness of individuals. A credit bureau consider's a person's spending habits and history and assigns them a credit score that can...

What is a Credit Card?

A credit card is a tangible card issued by financial institutions to consumers for purchases using borrowed money that they are expected to pay back. Any balance not repaid in full by a specified period of time may be charged interest, typically...

What is a Credit Limit?

Credit limit is the maximum amount of credit that a financial institution is willing to extend to a customer.   See Also: How I Ditched My Debt For Good Is Your Debt Ratio Healthy? Ask An Advisor: Help! I'm Running Out of Money 5 Best Cash-Back...

What is a Credit Report?

A credit report is a report that typically contains a person's credit score and detailed information on their financial history, including open and closed credit accounts, loans, bankruptcies, late payments and any recent credit inquiries. Credit...

What is a Credit Score?

A credit score is a numeric representation of a person's creditworthiness determined by a statistical formula that calculates likelihood of debt repayment. The most common formula used is the FICO, or Fair Isaac Corporation, score formula.    See...

What is Credit Utilization Rate?

Credit Utilization Rate is an important factor used by credit bureaus when determining credit scores that is calculated by dividing the total of all outstanding balances by the total of all credit limits for each account. Generally, higher...

What is a Custodial Account?

A custodial account is an account created for the benefit of a minor at a financial institution that typically can only hold mutual funds or other similar investments.   See Also: Your DIY Financial Planning Guide Top 8 Mistakes Investors Make...

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