Banking, Credit, and Debt Cheat Sheet

The core ideas of Banking, Credit, and Debt distilled into a single, scannable reference — perfect for review or quick lookup.

PiqCue — piqcue.com/banking-credit-debt/cheatsheet

Quick Reference

Checking Account

A deposit account allowing frequent deposits and withdrawals for daily transactions. Offers high liquidity with debit card and check-writing but earns little or no interest.

High-Yield Savings Account

A deposit account, typically online, paying significantly higher APY than traditional banks due to lower overhead costs.

FICO Credit Score

A 300-850 number representing creditworthiness: payment history (35%), amounts owed (30%), length of history (15%), new credit (10%), credit mix (10%).

APR (Annual Percentage Rate)

The annualized cost of borrowing including interest and fees, standardized by TILA for comparison.

Secured vs. Unsecured Debt

Secured debt is backed by collateral (home, car). Unsecured debt (credit cards) has no collateral, so rates are higher due to lender risk.

Compound Interest on Debt

Interest charged on principal and accumulated unpaid interest. Credit cards compound daily, making balances grow exponentially.

Amortization

Spreading a loan into fixed payments where early payments are mostly interest and later ones mostly principal.

Credit Utilization Ratio

Balance / credit limit as a percentage. Second largest FICO factor (30%). Keep below 30%, ideally below 10%.

Minimum Payment Trap

Paying only 1-3% of balance barely covers interest, extending payoff to many years with total interest exceeding the original amount.

FDIC Insurance

Government-backed insurance guaranteeing deposits up to $250,000 per depositor, per insured bank. Credit unions have NCUA equivalent.

Key Terms at a Glance

Amortization:The process of spreading a loan into a series of fixed payments over time, with each payment covering both interest and principal.

Annual Percentage Rate (APR):The annualized cost of borrowing money, including interest and fees, expressed as a percentage for standardized comparison.

Annual Percentage Yield (APY):The effective annual rate of return on a deposit account, accounting for the effect of compounding interest.

Balance Transfer:Moving debt from one credit card to another, typically to take advantage of a lower introductory interest rate.

Certificate of Deposit (CD):A time deposit offered by banks with a fixed term and fixed interest rate, typically paying higher rates than savings accounts.

Checking Account:A deposit account at a financial institution allowing frequent deposits and withdrawals for daily transactions.

Collateral:An asset pledged by a borrower to secure a loan, which the lender can seize if the borrower fails to repay.

Compound Interest:Interest calculated on both the initial principal and the accumulated interest from previous periods.

Credit Bureau:An agency (Equifax, Experian, TransUnion) that collects and maintains credit information used to generate credit reports and scores.

Credit Report:A detailed record of an individual credit history, including accounts, payment history, inquiries, and public records.

Credit Score:A numerical rating (300-850 on the FICO scale) representing creditworthiness based on credit history and behavior.

Credit Utilization:The ratio of current credit card balances to total available credit limits, expressed as a percentage.

Debt Avalanche:A repayment strategy targeting the highest-interest-rate debt first to minimize total interest paid.

Debt Snowball:A repayment strategy targeting the smallest balance first for psychological momentum, regardless of interest rate.

Debt-to-Income Ratio:The percentage of gross monthly income that goes toward paying monthly debt obligations.

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