📖 The finance words explained
Money in
The words you'll meet on your payslip and in your online bank.
- Gross — your salary before tax. The number you hear in the job interview.
- Net — what actually lands in your account. The only number that matters.
- Tax withholding — what your employer deducts and sends to the state before you're paid.
- Holiday pay — money your employer sets aside from your salary and pays out in the holiday month instead of regular pay.
- Child benefit — a fixed monthly payment per child from the state.
Loans and debt
The words you'll meet at the bank.
- Interest — the price you pay to borrow money, in percent per year.
- Nominal rate — the rate the bank advertises.
- Effective rate — the nominal rate plus fees. The true price. Always compare this one.
- Principal — the part of the monthly payment that actually pays the loan down.
- Instalment — one monthly payment, usually interest + principal + fee.
- Fee — a fixed price for extra work: sending the invoice, reminding you, or administering the loan. Interest is the price of the money — the fee is the price of the job.
- Annuity loan — the same payment all the way. The usual mortgage.
- Serial loan — equal principal every month. Heaviest at the start, cheapest overall.
- Equity — your own money in a purchase. When buying a home, you normally need a certain share of your own money before the bank lends you the rest.
- Collateral — the asset the bank can take if you don't pay. Your home is the collateral for the mortgage — that's why mortgages are so much cheaper than consumer loans.
- Consumer loan — a loan with no collateral. The most expensive kind you can hold.
- Refinancing — bundling several expensive small loans into one cheaper loan. Also called a consolidation loan.
When it goes wrong
The words you hope never to meet — but should know.
- Reminder — the first nudge about an unpaid bill. Comes with a fee.
- Debt collection — an agency has taken over the claim. The amount grows every day.
- Wage garnishment — when bills stay unpaid long enough, the state can collect the money straight from your paycheck. Most countries have a public enforcement officer for this; in Norway the job belongs to the police.
- Payment remark — a default flag that makes loans, phone plans and renting nearly impossible. It stays for four years.