Banking/Investing/Financial terms 5

📚 Important Words to Know
collateral — an asset pledged by a borrower as security for a loan, which the lender can seize if the loan is not repaid
interest rate — the percentage charged on a loan or paid on a deposit, typically expressed as an annual rate
liquidity — the ease with which an asset can be converted into cash without significantly affecting its value
credit rating — an assessment of a borrower's ability to repay debt, assigned by a credit agency
overdraft — a situation where a bank account balance falls below zero, allowing withdrawals beyond available funds
prime rate — the benchmark interest rate that commercial banks charge their most creditworthy customers
wire transfer — an electronic method of transferring funds directly from one bank account to another
certificate of deposit (CD) — a savings product that holds a fixed amount of money for a fixed period in exchange for a higher interest rate
compound interest — interest calculated on both the initial principal and the accumulated interest from previous periods
mortgage — a loan secured by real estate property, typically repaid over 15 to 30 years