In a loan, what is the 'principal'?
AnswerThe original amount borrowed
The principal is the sum originally borrowed, separate from the interest charged on it.
Money · Facts & stats
Credit facts & stats
7 fact-checked facts about credit, borrowing and interest, each with the reason behind it. 5 more are in today's round and join this page after it closes.
The basics
What does APR stand for?
AnswerAnnual percentage rate
APR, annual percentage rate, expresses a loan's yearly charges as a percentage.
Going deeper
The word 'credit' comes from the Latin 'credere', meaning what?
AnswerTo believe or trust
Credit comes from Latin 'credere', to believe or trust, since lenders trust borrowers to repay.
What is compound interest?
AnswerInterest calculated on the principal plus earlier interest
With compounding, each period's interest is added to the balance, so later interest is earned on interest too.
In double-entry bookkeeping, every transaction is recorded as both a debit and what?
AnswerA credit
Double-entry bookkeeping records each transaction twice, as a debit in one account and a credit in another.
Expert level
The 'rule of 72' estimates what?
AnswerHow many years it takes money to double at a given interest rate
Divide 72 by the annual rate: at 6% interest, money roughly doubles in 72 / 6 = 12 years.
What does the Luhn algorithm, used on payment card numbers, check for?
AnswerTyping errors, using a check digit
The Luhn formula uses a final check digit to catch common mistakes like a single mistyped digit.
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