A

Account - A record of financial transactions for a deposit or loan for a customer of the bank.

Account Reconciliation - Matching one's account balance to the corresponding bank statement.

Accrued Interest - Interest that has been earned, but not yet paid, on an interest-bearing investment.

ACH (Automatic Clearing House) - Nationwide electronic funds transfer network, which enables participating financial institutions to distribute electronic credit and debit entries to bank accounts and to settle such entries.

Active Account - A bank account in which there has been at least one transaction in a 3 or 6-month period.

Adjustable Rate - See Variable Rate.

Amortization - Schedule of loan payments of principal and interest over a period of time.

Annual Fee - Any fee for a product or service that is paid once a year.

APR (Annual Percentage Rate) - Interest rate reflecting the total yearly amount of the interest on a loan or deposit, expressed as a percentage rate.

APY (Annual Percentage Yield) - Total amount of interest that would be received on a deposit, based on the annual percentage rate and the frequency of compounding for a 365-day period, expressed as a percentage.

Assets - Items an individual owns that have a monetary value, such as cash, real estate, stocks, bonds, etc.

ATM (Automated Teller Machine) - Terminal at which a customer can withdraw cash, make deposits, make loan or credit card payments, ask for an account balance, or transfer money between accounts 24 hours a day.

Automatic Funds Transfer - Transactions that occur automatically through computer networks.

Average Daily Balance - Average amount of money that is in an account during a period of time. It is calculated by adding the daily balances over a set period of time and dividing by the number of days in that period.

B

Balance - Amount of money in a deposit account or the amount owing on a loan account at a given point in time.

Balloon Payment - A final loan payment that is considerably higher than prior regular payments, to pay off the loan.

Beneficiary - Recipient of funds, property, or other benefits from an insurance policy, will, or trust.

Billing Cycle - Number of days between account statements.

Bounced Check - A check that the bank returns to the payee due to insufficient funds in the account.

C

Cash - Any recognized currency in the form of bills or coins.

Cash Machine - Machine at which a customer can withdraw cash 24 hours a day, but cannot make other transactions like at an ATM machine.

Cashier's Check - A check whose face amount is paid to the bank when it is issued. The bank then assumes the obligation, so the check, therefore, cannot bounce.

CD (Certificate of Deposit) - Short- or medium-term, interest-bearing form of time deposit. Money from a time deposit cannot be withdrawn before the maturity date without being subject to a penalty for early withdrawal.

Certified Check - A check for which the bank guarantees payment.

Check - A negotiable instrument written against deposited funds and used instead of cash.

Checking Account - An account that allows a customer to write checks against deposited money.

Clearance Time - Time required for a deposited check to be processed and credited to the account.

Closed-end Credit - A loan agreement in which the amounts advanced, plus any finance charges, are to be repaid in full over a period of time.

Collateral - Property that secures a loan.

Compound Interest - Interest that is calculated on the initial principal as well as the accumulated interest of prior periods.

Cosigner - Another person who signs for and guarantees a loan by assuming equal liability for it.

Credit - 1. Reputation for solvency and integrity entitling a person to be trusted in buying or borrowing. 2. Amount a financial institution is willing to loan a person.

Creditworthiness - Measure of a person's ability and willingness to repay debts.

Credit Card - Card that may be used to repeatedly borrow money or buy products and services on credit.

Credit History - Record showing how a person has borrowed and repaid debt.

Credit Line - See Line of Credit.

Credit Risk - The risk that a borrower will fail to meet the terms and conditions of the loan, causing the bank to suffer a loss.

Custodial Account - An account created for the benefit of a minor with an adult as the custodian.

D

Debit - An amount subtracted from the balance of an account.

Debit Card - Bank card used in lieu of a check to pay for goods and services. Funds are subtracted from the customer's account linked to the card.

Debt - What one owes and is obligated to pay.

Default - Failure to meet the terms of a credit agreement.

Deposit - Money added to an account at a financial institution.

Deposit Slip - A form used when putting money into an account to assure it is put into the correct account.

Direct Deposit - A means of payment, which electronically credits a customer's checking or savings account.

E

Electronic Banking - A method of banking other than inside a physical branch, including online banking, an Automatic Teller Machine (ATM), and telephone banking.

Electronic Funds Transfer [EFT] - A transfer of funds initiated by electronic means, such as telephone, computer, or ATM.

Endorse - To sign one's name as the payee on the back of a check to obtain the amount specified on the front.

Estate - All of one's possessions, especially the property and debts left at death.

F

Federal Deposit Insurance Corporation (FDIC) - A federal agency that insures deposits in banks.

Finance Charge - Amount paid to get credit.

Financial Adviser - Person that gives financial advice for a fee.

Financial Statement - A financial statement is a "snapshot" of an individual's situation at a given point in time. It lists that person's assets (possessions), liabilities (debts), and net worth (possessions minus debts). Financial statements usually show a statement of income on a monthly and annual basis.

Fixed Interest Rate - A predetermined interest rate that does not change over the life of the agreement. Opposite of a variable rate.

Floating Rate - See Variable Rate.

Foreign Transaction - A transaction made at an ATM not a part of the financial institution's network.

Frozen Account - A bank account whose funds may not be withdrawn.

I

Inactive Account - A bank account in which there have not been transactions for a three-month period of time.  An account becomes dormant after 6 months of no transactions.

Interest - Amount of money earned on an account based on a percentage of the account's balance.

Interest-bearing - Paying interest.

J

Joint Account - An account owned by two or more people.

K

Kiting - Depositing and drawing checks between accounts at two or more banks to illegally benefit from the time it takes for the debits and credits to clear.

L

Letter of Credit - A document issued by the bank that guarantees payment for a customer over a specified period of time and up to a specified amount.

Liability - A financial debt due either now or sometime in the future.

Line of Credit - An amount of credit, which the bank is willing to advance to its clients over specified periods of time.

Loan - An amount of money transferred from the bank to a customer, which must be paid back over or at a specified period of time. The customer is required to repay the money plus interest according to terms of the loan agreement.

M

Minimum Balance - A specified amount of money that must be maintained in an account at all times to avoid service charges.

Money Order - A financial instrument, purchased from the bank, which allows the purchaser to specify a payee on the order to receive a stated amount of money on demand.

Mortgage - A legal document whereby real estate is pledged as collateral for the repayment of a loan.

N

Net Worth - Value of the total assets a person or entity owns after subtracting total liabilities.

Not-Sufficient Funds (NSF) - Meaning there are insufficient funds in an account to cover the amount on a check or draft.

O

Online Banking - A system allowing customers to perform banking activities from anywhere through an internet browser.

Open-end Credit - A line of credit that may be used repeatedly up to a certain limit. Also known as a charge account or revolving credit.

Overdraft - The amount by which withdrawals exceed deposits in a deposit account.

P

PIN (Personal Identification Number) - Secret code used with a bank card to access an individual's bank account at an ATM machine or other terminal.

Prime Rate - Benchmark rate used by banks in lending money. This rate is published in the Wall Street Journal.

Principal - Sum of money upon which interest is calculated.

R

Real Estate - Land and the buildings on it.

Refinancing - Restructuring a loan agreement under a new finance agreement.

Real Time - Up-to-minute information available without delay.

Reconciliation - See account reconciliation.

Repossess - Reclaim possession of collateral for the failure to make the agreed payments or other non-compliance with the credit agreement.

S

Safe Deposit Box - A container in a secure vault that is rented to an individual or organization for the safekeeping of valuables.

Savings Account - A deposit account that earns interest, for people wanting to save money over time.

Service Charge - Fees charged for account maintenance that are automatically deducted from the account and appear on the monthly or quarterly statement.

Short-term Deposits - Deposits made for a term of less than one year.

Statement - Record of account balance and transactions over a specified period of time for a given account.

Stop Payment - A request for the bank not to honor the payment of a check after it has already been delivered, but before it has cleared the bank.

T

Telephone Banking - A method of banking over the telephone. Requests are either carried out by a customer service representative or by a voice response unit.

Teller - A customer service representative at the bank who provides cash or checks for withdrawals, accepts deposits, and executes most other standard customer services involving the transfer of funds.

Term - The specified period of time established to repay a loan or redeem a certificate of deposit.

Time Deposit - Savings account or certificate of deposit held in the bank for a fixed term.

Transaction - Activity that affects an account and that is done at the request of the account holder.

Transfer - A movement of funds from one account to another.

Traveler's Check - Check designed especially for travelers; issued by a financial institution in various fixed denominations; functions as cash anywhere in the world; and is insured against loss or theft.

U

Uncollected Funds - Funds that have been deposited in an account by means of a check or draft drawn on another institution that has not yet paid the check or draft.

V

Variable Interest Rate - An interest rate that may fluctuate over the life of the loan, often tied to an index (prime rate) that reflects changes in market rates of interest. When the interest rate fluctuates, loan payments are recalculated using the new rate. Opposite of a fixed rate. Also called adjustable or floating rate.

W

Wire Transfer - Electronic transfer of funds, usually involving large dollar amounts.

Withdrawal - Act of taking money out of an account at the bank, assuming there are sufficient funds in the account.