Financial Literacy Resource Center

A credit score is a number from 300 to 850 that rates a consumer or individual’s creditworthiness. It is based on credit history: number of open accounts, total levels of debt, repayment history, and other factors. The higher the score, the better a borrower looks to potential lenders, because lenders use credit scores to evaluate the probability that an individual will repay loans in a timely manner.

Interest is the monetary charge for borrowing money—generally expressed as a percentage, such as an annual percentage rate (APR). Interest is the amount of money a lender or financial institution receives for lending out money. And interest can also refer to the amount of ownership a stockholder has in a company, usually expressed as a percentage.

A cryptocurrency is a digital or virtual currency secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. The most commonly known cryptocurrency is Bitcoin. Many cryptocurrencies are decentralized networks based on blockchain technology. Generally, as of March 2022, cryptocurrencies are not issued by any central authority, rendering them theoretically immune to government interference or manipulation.

Diversification is a risk management strategy where one chooses a variety of investments for their portfolio. A diversified portfolio contains a mix of distinct asset types, such as stocks and bonds, in an attempt at limiting exposure to any single asset or risk. The idea is that different kinds of assets will, on average, yield higher long-term returns and lower the risk of any individual holding or security.

An asset class is a group of investments that have similar characteristics and are subject to the same laws and regulations. Historically, the three main asset classes have been equities (stocks), fixed income (bonds), and cash equivalent or money market instruments.

An import is a good or service that was produced in one country, and bought in another one. Imports, along with exports, are one of the key components of international trade. If the value of a country's imports exceeds the value of its exports, the country has a negative balance of trade, also known as a trade deficit.

The term "security" in finance refers to a fungible, negotiable financial instrument that holds some type of monetary value. Securities are used to raise capital in public and private markets. The primary types of securities are equity—which provides ownership rights to holders—debt, and hybrids, which combine aspects of debt and equity.

A mobile wallet stores credit card or debit card information on a mobile device like your phone, a tablet, or smartwatch. With a mobile wallet, one can buy things online or in stores more easily. They may also be more secure than physical payment cards because of the technology they use to protect your account information.

Simply put, compound interest is the interest you earn on interest. It is calculated on both the initial principal and the accumulated interest from previous periods. Compounding multiplies money at an accelerated rate and the greater the number of compounding periods, the greater the compound interest will be.

Consumer debt includes personal debts that are owed as a result of purchasing goods that are used for individual or household consumption. Examples of consumer debt include credit card debt, student loans, auto loans, mortgages, and payday loans. These can be extended by a bank, the federal government, and credit unions.

Fintech, or financial technology, is used to describe new technology that seeks to improve and simplify the delivery and use of financial services. Fintech is utilized by companies, business owners, and consumers, in an effort to better manage financial operations, processes, and lives. Examples of fintech applications include robo-advisors, payment apps, and investment apps, among others.

Net worth is the value of the assets a person or corporation owns, minus the liabilities they owe. It is an important metric to gauge a company's health, providing a useful snapshot of its current financial position. Net worth has also become popular in everyday culture, with lists ranking the people with the highest net worth as well as the net worth of various celebrities.