A credit card is a card used to buy products on credit – get the item you want now, pay later. Credit card companies make money by charging high interest rates every time a customer fails to pay their bill in full each month and also by taking a very small percentage of each purchase.
Archive for the ‘Daily Definition’ Category
A Credit Card is…
Wednesday, July 1st, 2009Systemic Risk is…
Tuesday, June 30th, 2009Systemic risk is the likelihood that a whole financial system will fail if something goes wrong in one of its many, small, connected parts. Just like a single tree falling on a power-line can take out an entire grid, the failure of a single financial sector can have wide-reaching effects across the economy.
Pay-Yourself-First is…
Tuesday, June 30th, 2009Pay-yourself-first is the smart money management practice wherein you place the money you’ve budgeted to save in your savings first thing – before you pay for bills, buy food, clothes, or anything else. This way, you’re making savings a priority and ensuring that you get some of your income before anyone else does.
A 501(c)(3) is…
Tuesday, June 30th, 2009A 501(c)(3) is a religious, literary, charitable, educational, or scientific nonprofit organization that is exempt from paying certain taxes. The name refers to the specific section of tax law that allows this.
A Defined Contribution Plan is…
Tuesday, June 30th, 2009A defined contribution plan is a retirement plan in which the company you work or you (sometimes both) put money into the employees plan sometimes at a rate, such as 5% of annual income. That money is generally invested on the employee’s behalf. At the time of the withdrawal, the amount that the employee will receive is not guaranteed because it fluctuates with the investments. An example of a DCP is a 401(k) plan.
A Venture Capitalist is…
Tuesday, June 30th, 2009A venture capitalist is someone who provides funding for high earning-potential companies. It can be early, mid, or late stage investing. For instance, if you have a new and cool idea for a company but you do not have the money to start it, you could pitch your idea to a venture capitalist and hopefully attain early-stage financing.
A Microloan is…
Monday, June 29th, 2009A microloan is a relatively small amount of money (usually from $100-$25,000) lent to an individual or entrepreneur to help him or her get a business up and running. Microloans are generally targeted at people who are unattractive to large financial institutions because they don’t have good enough credit or collateral and are therefore considered risky customers.
The Peso is…
Tuesday, June 23rd, 2009The peso is the currency of several Central and South American countries (Argentina, Chile, Colombia, Cuba, Dominican Republic, Mexico) and the Philippines, but each country’s peso is its own unique currency with its own value. It’s like how the Canadian dollar and the U.S. dollar share the same name, but they are definitely different currencies.
A Tax-Deduction is…
Tuesday, June 23rd, 2009A tax-deduction is any expense that can be removed from your annual reported income, which reduces the amount of taxable income (also called adjusted gross income). People usually talk about this as “writing something off.” For example, any money donated to a 501c3 organization can be subtracted from your annual reported income.
A Lease is…
Tuesday, June 23rd, 2009A lease is an agreement between two entities for the transfer of a real or valuable property from one to the other, in exchange for a payment or something similar. A lease is basically when you rent something from another person or a company – you can lease a car, lease (rent) an apartment, etc.