4 debt-related words everyone should know


Turner Cowles | Yahoo Finance

Debt is a language of its own. Anyone who’s ever had a credit card balance or signed mortgage papers or taken student loans has been bombarded with terminology that can make your head hurt.

For instance, Credible.com, an online consumer marketplace, surveyed 1,000 people about the terms of their student loans, and more than 90% failed the quiz. Even more shocking (or perhaps not): no one who took the quiz got all seven questions right.

As we kick off Yahoo Finance’s #SlayYourDebt month, let’s break down some of the big words that you’ll see when dealing with debt.


When you borrow money, the amount borrowed in the very beginning is the principal. It’s the base level of your loan before any interest, fees or penalties are added. In terms of student loans, if you’re the average class of 2017 graduate, you took out $39,400 to cover college, which means $39,400 would be your principal.

Sometimes, with large debts (like the $100,000 I owe), it can be hard to chip away at the principal because interest payments can be so high.

To think about it in credit card terms, you add to your principal every time you swipe your credit card. That $5 latte? It just added $5 to your principal.

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