Glossary of Terms

A|B|C|D|E|F|G|H|I|J|K|L|M|N|O|P|Q|R|S|T|U|V|W|X|Y|Z

• A
  • Account balance - The balance in an account at the beginning of each business day; includes all deposits and withdrawals that were posted from the previous night, whether or not funds have been collected. See also Glossary term, "collected balance."
  • Account statement - A printed or online statement of all the debit and credit transactions on an account for a given statement cycle.
  • Active account - A bank account in which there are recent transactions.
  • Annual percentage yield (APY) - A percentage rate reflecting the total amount of interest paid on a deposit account (checking, savings, CDs, IRAs), based on the interest rate and the effect of interest compounding for one year.
  • Automated Clearing House (ACH) - A nationwide electronic funds transfer network that enables participating financial institutions to distribute electronic credit and debit entries to bank accounts and to settle such entries.
  • Automatic Funds Transfer - An arrangement that moves funds from one account to another automatically on a pre-arranged schedule; for example, every payday or once a month.
  • Automatic payment - An arrangement that authorizes payments to be deducted automatically from a bank account (usually a checking account) to pay bills (such as insurance payments, rent, mortgage or loan payments). Payments are usually scheduled to be made on a certain day of the month.
  • Available balance - The amount of money in an account that is available for immediate use.
  • Average daily balance - The average amount in a deposit account that equals the sum of the daily account balances during an accounting period, usually a monthly statement cycle, divided by the number of days in the period. Can sometimes be used to calculate whether a service charge applies or to qualify for special services. See also Glossary term, "minimum daily balance."
• B
  • Bounced check - A check which a bank returns unpaid because there are not enough available funds in the account.
• C
  • Cancelled check - A check that has been paid. A cancelled check may generally be used as proof of payment.
  • Cashier's check - A check drawn on and issued by a bank. It does not usually bounce because its face amount is paid to the bank when it is issued and the bank then assumes the obligation.
  • Certificate of Deposit (CD) - A time deposit that is payable at the end of a specified term. CDs generally pay a fixed interest rate and generally offer a higher interest rate than other types of deposit accounts. Terms can range from 7 days to 10 years. CDs are insured by the FDIC up to the maximum allowed by law. If an early withdrawal from the CD prior to the end of the term is permitted, a penalty is usually assessed.
  • Certified check - A check for which the bank guarantees payment.
  • Checking account - A type of deposit account, sometimes interest bearing, which enables customers to place funds and withdraw their available funds on demand, typically by writing a check.
  • Check Card - A plastic card that customers can use anywhere the issuing financial institution's ,(i.e. MasterCard, Visa) debit cards are accepted. Because money is deducted directly from a designated checking account, there are no finance charges. A Check Card can also be used at ATMs so there is no need to carry both a Check Card and an ATM card. Also referred to as a debit card.
  • Check Image - A service where you receive images of the front of your cancelled checks. Some account statement includes images of checks that posted to your account during the statement cycle. You can view and print copies of the front and back of checks posted within the a designated time frame by signing on to your online account.
  • Collected balance - The balance in a deposit account, not including deposited items that have not yet been paid, or collected. See also Glossary term, "account balance."
  • Combined balance - Any combination of balances from linked accounts, such as savings, checking, and CDs. Can be used to meet the balance required to waive the monthly fee on some checking accounts.
  • Compound Interest - Interest that is calculated not only on the principal balance in the account, but also on the accumulated interest. The more frequently interest is compounded, the higher the effective yield.
  • Credit - A financial term that refers to an increase in a deposit account balance (such as a deposit made to the account). See also Glossary term, "debit."
  • Credit card - A plastic card issued to an individual for the purpose of purchasing goods and services using credit; a credit limit is established for each card holder.
  • Check enclosure - A service where the bank returns the checks with the account statement.
  • Custodial account - An account created for the benefit of a minor with an adult as the custodian.
• D
  • Debit - A financial term that refers to a decrease in a deposit account balance, such as a check posted to the account. See also Glossary term, "credit."
  • Debit card - A plastic card issued by a bank which customers can use anywhere the issuing financial institution's, (i.e. MasterCard, Visa) debit cards are accepted. Because the money is deducted directly from a designated checking account, there are no finance charges. A debit card can also be used at ATMs so there is no need to carry both a debit card and an ATM card. See also Glossary term, "Check Card."
  • Deposit - Money added into a customer's account at a financial institution.
  • Direct deposit - With direct deposit, your recurring deposits are made electronically into your checking, savings or money market account. Deposits can include salary, pension, Social Security and Supplemental Security Income (SSI) benefits, or other regular monthly income.
  • Disclosure - Information pertaining to the account services, fees and regulatory requirements.
• E
  • Electronic Funds Transfer (EFT) - Any transfer of funds initiated by electronic means, such as an electronic terminal, telephone, computer, ATM or magnetic tape.
• F
  • Federal Deposit Insurance Corporation (FDIC) - The Federal Deposit Insurance Corporation (FDIC) preserves and promotes public confidence in the U.S. financial system by insuring deposits in banks and thrift institutions for at least $100,000; by identifying, monitoring and addressing risks to the deposit insurance funds; and by limiting the effect on the economy and the financial system when a bank or thrift institution fails. (Recently the FDIC raised the insurance levels to $250,000 until December 31, 2009.)
  • Float - The amount of time represented by checks that are in transit between the date they are deposited to an account and the date they are paid. The time between deposit and payment of the check is referred to as the float.
• I
  • Inactive account - A bank account in which there have not been any transactions for an extended period of time. In some cases (no activity within the period specified by state law, generally at least three years), the law requires a bank to turn the account over to the state as unclaimed property.
  • Interest bearing - An account that earns interest is an interest bearing account.
  • Interest rate - The rate paid on an interest-bearing account, such as savings, CDs and some checking accounts; also, the rate charged on a loan or line of credit. Different types of accounts and loans pay or charge different rates of interest.
• J
  • Joint account - Any account owned by two or more people.
  • Jumbo CD - Same as Certificate of Deposit (CD), except the deposit amount usually is a minimum of $100,000.
• L
  • Linked account - Any account linked to another account at the same financial institution so that funds may be transferred electronically between accounts, and, in some cases, the combined balance may be used to help meet the balance required to waive a monthly service charge on one of the accounts.
• M
  • Maturity Date - Date when the term of your CD ends.
  • Minimum daily balance - The lowest end-of-day balance in an account during a statement cycle. It is often required to be kept in an account each day to earn interest, avoid a service charge or qualify for special services. See also Glossary term, "average daily balance."
  • Money market account - A savings account that generally permits up to three withdrawals by check or debit card each statement cycle.
  • Money order - A financial instrument, issued by a bank or other institution, allowing the individual named on the order to receive a specified amount of cash on demand. Often used by people who do not have checking accounts.
  • Monthly maintenance fee - The fee charged to maintain a particular account, such as a checking account.
• N
  • Non-bank ATM - An ATM or cash machine that does not prominently display a bank's name or logo. Fees generally apply to cash withdrawals at non-bank ATMs. Non-bank ATMs generally do not accept deposits.
• O
  • Online banking - A service that allows an account holder to obtain account information and manage certain banking transactions, including bill payment through a personal computer.
  • Original Interest Rate - Rate assigned when the CD account is opened. The Original Interest Rate is listed on your CD account receipt and statement.
  • Overdraft - An overdraft occurs when you do not have enough available funds in your account to cover a check or other withdrawal, but the bank pays the items and overdraws your account. See also glossary term "Overdraft protection."
  • Overdraft protection - A service that allows a checking account to be linked to another account that helps provide protection against returned items or overdrafts. When your checking account does not have sufficient available funds to cover a check, funds are automatically transferred from the available balance in the linked account to cover the check. Choices can include using a credit card or a line of credit account as the linked account to provide protection.
• P
  • Personal identification number (PIN) - Personal Identification Numbers (PINs) are numbers that customers use with their ATM or Check Card to access their accounts via ATMs or to make purchases with their Check Card. These numbers should always be kept confidential.
• R
  • Rate Original Interest Rate - Rate assigned when the CD account is opened. The Original Interest Rate is listed on your CD account receipt and statement.
  • Returned Item - When you do not have enough available funds in your account (including any overdraft protection transfer from another account) to cover a check, the bank may decide not to pay the check and to return it to the payee. A returned item fee may be charged to your account. See your account agreement for additional information.
• S
  • Savings account - A deposit account which pays interest, but funds cannot be withdrawn by check writing.
  • Simple interest - The interest calculated on a principal sum, not compounded on earned interest.
  • Stop payment - When you ask a bank not to pay a check or payment you have written or authorized. Stop payments are generally placed on lost or stolen checks or on checks related to disputed purchases. Stop payment orders generally expire after 6 months and a fee usually applies.
• T
  • Time deposit or CD - An account for a fixed term with the understanding that the funds will remain on deposit until the end of the term. Penalties for early withdrawals may apply.
  • Transaction limitations - Refers to a Federal Reserve Board regulation that limits certain types of withdrawals and/or transfers from savings and money market deposit accounts. There can be no more than six preauthorized or automatic transfers, or telephone/PC transfers (including bill payments) out of the account each month; of the six, if applicable, no more than three of the six limited transfers may be by check or debit card. Withdrawals at ATMs and teller windows from these accounts are unlimited.
  • Transfer - A movement of funds from one account to another.
  • Travelers cheque - Check issued by a financial institution which functions as cash but is protected against loss or theft. Useful when traveling. Also referred to as traveler's checks.
• U
  • Uncollected funds - Refers to items deposited in an account that have not yet been collected, or paid, by the bank on which they were drawn.
• V
  • Variable rate - An interest rate that may fluctuate during the term of a loan, line of credit or deposit account. Sometimes the rate changes based on changes in an index rate, such as the prime rate or other prescribed criteria. Sometimes the bank changes the rate at its discretion.
• W
  • Wire transfer - An electronic payment service for transferring funds by wire (for example, through the Federal Reserve Wire Network or the Clearing House Interbank Payments System).
  • Withdrawal - A removal of funds from an account.

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