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Money Terms Explained

A plain-English glossary of the words on your card statement, loan offer and payslip, each with an example and the tool to work it out.

  • 65Terms
  • 6Subjects

Credit Cards

Add-on CardAn extra card on your account for a family member, sharing your credit limit.ReadAirport Lounge AccessFree entry to airport lounges that some credit cards include, within a yearly or quarterly limit.ReadAnnual FeeThe yearly charge a bank takes for keeping your credit card, plus 18% GST.ReadBilling CycleThe monthly period whose spends appear together on one credit card statement.ReadCash AdvanceWithdrawing cash from an ATM with a credit card, which is charged a fee and interest from day one.ReadCashbackMoney a card credits back to your statement as a percentage of what you spend.ReadCredit LimitThe most you can owe on a credit card at one time.ReadDynamic Currency Conversion (DCC)When a shop or ATM abroad offers to charge you in rupees, using its own exchange rate.ReadEMI ConversionTurning a large card purchase into monthly instalments with interest.ReadForex MarkupA percentage fee a card adds to every spend made in a foreign currency.ReadFuel Surcharge WaiverA refund of the 1% surcharge petrol pumps add when you pay by credit card.ReadInterest-Free PeriodThe days between a purchase and its payment due date during which no interest is charged.ReadJoining FeeA one-time fee charged when a credit card is issued, separate from the annual fee.ReadLate Payment FeeA charge added when not even the minimum amount due is paid by the due date.ReadLifetime Free Credit CardA credit card with no joining fee and no annual fee for as long as you hold it.ReadMinimum Amount DueThe smallest payment that keeps your card account in good standing, usually about 5% of the bill.ReadNo-Cost EMIAn EMI where the seller gives a discount equal to the interest, so the instalments add up to the price.ReadReward PointsPoints a credit card gives on your spends, which you can turn into vouchers, miles or a statement credit.ReadSecured Credit CardA credit card issued against a fixed deposit, with no income proof or credit history needed.Read

Credit Score

CIBIL ScoreThe credit score from TransUnion CIBIL, the best-known of India's four credit bureaus.ReadCredit ReportThe record of every loan and card in your name, with how you have repaid them.ReadCredit ScoreA number from 300 to 900 that sums up how reliably you have repaid credit.ReadCredit UtilisationHow much of your total credit card limit you are using, as a percentage.ReadHard EnquiryA check on your credit report made by a lender when you apply for credit.Read

Loans

APR (Annual Percentage Rate)The yearly cost of a loan including fees, not just the interest rate.ReadCollateralAn asset pledged to a lender as security for a loan.ReadEMI (Equated Monthly Instalment)The fixed amount you repay each month on a loan, covering interest and part of the principal.ReadFlat Interest RateInterest charged on the full loan amount for the whole tenure, even as you repay it.ReadFOIR (Fixed Obligation to Income Ratio)The share of your monthly income that goes on EMIs and other fixed payments.ReadKey Fact Statement (KFS)A standard summary of a loan's cost and terms that lenders must give you before you sign.ReadLoan ForeclosureRepaying the whole of a loan before its tenure ends.ReadLoan TenureThe time over which a loan is repaid.ReadPart-PrepaymentPaying off part of a loan early, to reduce the EMI or the tenure.ReadProcessing FeeA one-time charge a lender takes for handling your loan application.ReadReducing Balance Interest RateInterest charged only on the part of the loan you still owe.ReadRepo RateThe rate at which the RBI lends to banks, which moves the rates on most floating-rate loans.Read

Banking

DICGC Deposit InsuranceInsurance that repays up to ₹5 lakh per depositor per bank if a bank fails.ReadFixed Deposit (FD)A sum placed with a bank for a fixed period at a fixed interest rate.ReadIFSC CodeThe 11-character code that identifies a bank branch for NEFT, RTGS and IMPS transfers.ReadIMPSImmediate Payment Service: an instant transfer any time of day, usually up to ₹5 lakh.ReadKYC (Know Your Customer)The identity and address check banks and investment firms must do before opening an account.ReadMinimum BalanceThe average balance a savings account must keep each month to avoid a charge.ReadNEFTNational Electronic Funds Transfer: a bank-to-bank transfer that runs 24 hours a day, settled in half-hourly batches.ReadRecurring Deposit (RD)A fixed amount deposited every month for a set period, earning FD-like interest.ReadRTGSReal Time Gross Settlement: an instant bank transfer for amounts of ₹2 lakh or more.ReadUPIUnified Payments Interface: instant bank payments using a UPI ID, phone number or QR code.ReadZero Balance AccountA savings account with no minimum balance to keep.Read

Investing

CAGR (Compound Annual Growth Rate)The steady yearly growth rate that turns a starting value into an end value.ReadDemat AccountAn account that holds shares and other securities electronically.ReadEPF (Employees' Provident Fund)The retirement fund that salaried employees and employers both pay into every month.ReadExpense RatioThe yearly fee a mutual fund takes, as a percentage of your investment.ReadInflationThe rate at which prices rise, so the same money buys less each year.ReadNAV (Net Asset Value)The price of one unit of a mutual fund, worked out at the end of each business day.ReadPPF (Public Provident Fund)A government savings scheme with a 15-year lock-in and tax-free interest.ReadSIP (Systematic Investment Plan)Investing a fixed amount in a mutual fund every month.ReadStep-Up SIPA SIP whose monthly amount rises by a fixed percentage every year.ReadXIRRThe yearly return on investments made at different dates, such as a SIP.Read

Tax

CTC (Cost to Company)Everything an employer spends on you in a year, not what reaches your bank account.ReadELSS (Tax-Saving Mutual Fund)An equity mutual fund with a three-year lock-in that counts for the old regime's ₹1.5 lakh deduction.ReadGratuityA lump sum an employer pays when you leave after at least five years of service.ReadGST on Financial ServicesThe 18% tax added to bank and card fees and charges, but not to interest.ReadHRA (House Rent Allowance)The part of salary given towards rent, partly tax free under the old regime.ReadNew Tax RegimeThe default income tax system with lower slab rates and few deductions.ReadSection 80CThe income tax deduction of up to ₹1.5 lakh a year for set savings and payments, old regime only.ReadTDS (Tax Deducted at Source)Tax taken out by the payer before money reaches you, such as on salary or FD interest.Read
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