|Glossary of debt and savings terms
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31. Periodic rate -- The interest rate relating to a specific amount of time. It's used to calculate the finance charge for each billing period. For example, the monthly periodic rate is the cost of credit per month, while the daily periodic rate is the cost of credit per day.
32. Personal loan -- A loan from a lender that is not secured by any property. Rates tend to be similar to those of credit cards, which are another type of unsecured loan. The personal loan rates quoted on Bankrate are for a $3,000 fixed-rate loan and a term of two years.
33. Pre-approved -- A status indicating a potential customer has passed a preliminary credit screening as part of a credit card offer. A credit card company can still reject the same customer if it doesn't like the applicant's credit rating.
34. Previous balance -- The outstanding balance at the end of the last billing cycle. This amount excludes payments made toward the balance.
35. Purchases/new charges -- The total amount of new debts incurred during the current billing cycle. Different interest rates may apply to balance transfers and cash advances.
36. Recession -- A prolonged period (popularly defined as at least two successive quarters or six months) in which the economy contracts.
37. Roth IRA -- An alternative to a traditional IRA in which investors make after-tax contributions and later withdraw the money tax-free. Before making withdrawals, an investor must be at least 59½ years old and the account must have been established for at least five years. Contributions to a Roth are not tax-deductible. The Roth is named for Sen. William Roth Jr., former chairman of the Senate Finance Committee.
38. Savings account -- Liquid account that generally offers low or no minimum balance requirements. The account usually has no restrictions on the number of transactions, but often carries a monthly service charge and generally pays a low rate of interest. Savings accounts may be opened at banks, credit unions and other financial institutions, including those that offer accounts online. Account holders receive monthly or quarterly account statements showing activity during the statement period.
39. Secured card -- A credit card that a cardholder secures with a savings deposit to ensure payment of the outstanding balance if the cardholder defaults on payments. It is used by people new to credit or people trying to rebuild poor credit ratings.
40. Secured debt -- A debt that is secured by collateral. If the debtor fails to make payments, the creditor can take possession of the collateral used to secure the debt. A mortgage loan is a common example.
41. SEP IRA, or Simplified Employee Pension IRA -- Tax-deferred retirement plan for small businesses and self-employed people. The employer makes contributions.