Grace period is a time after deadline where late fees are waived if obligation met. Common in mortgage loans and insurance contracts. Usually 15-day duration varies by contract
Compound interest accumulates interest from principal and previously earned interest. Contrasts with simple interest, which only adds to principal. Frequency of compounding can range from yearly to daily
Overdraft occurs when transaction exceeds available account balance. Banks cover transactions even when account balance is negative. Banks base overdrafts on available balance, which may differ from listed balance
Interest fees are additional money charged for late payments. Interest rates compound monthly, typically 10% annual rate. Interest charges increase over time as unpaid balance grows
Compound interest calculates interest on both principal and accumulated interest. It is used in all financial and business transactions worldwide. Compound interest is always greater than or equal to simple interest
Principal is the original amount borrowed or invested in financial transactions. Term means "first in importance" in Latin. Serves as foundation for calculating interest and returns