AMORTIZATIONamortization (am-[schwa]r-t[schwa]-zay-sh[schwa]n), n.
1. The act or result of gradually extinguishing a debt, such as a mortgage, usu. by contributing payments of principal each time a periodic interest payment is due.
negative amortization. An increase in a loan’s principal balance caused by monthly payments insufficient to pay accruing interest.
2. The act or result of apportioning the initial cost of a usu. intangible asset, such as a patent, over the asset’s useful life. Cf. DEPRECIATION. ¡ª Sometimes also termed amortizement.