Banking Vocabulary | E-Banking | Using ATMs | ATM Help

Banking Vocabulary

Before you get trekking through this site, you will need to learn some new words. The list below has some basic words that you will need to know when talking about banking:

Account: Your account is the relationship you have with a bank or any other business. It's also a record of that relationship.

Activity: Anything that happens in your account, including deposits, withdrawals, checks paid, interest payments, and service fees.

Balance: The amount of money in an account, especially after an activity, such as a withdrawal or an interest payment. For loans, the balance is the total that you still need to repay.

Basis Point: 1/100th of a percentage point, or 1/10000th. When the Federal Reserve changes interest rates, you may hear someone talk about "25 basis points" or "50 basis points."

Budget: A plan for earning, spending and saving money over a given period of time.

Certificate of Deposit (CD): A type of account where you deposit money for a set amount of time, for example 6 months or 1 year. The interest rate on CDs is usually higher than on savings accounts.

Check: A piece of paper that transfers money from the check-writer's account to the person being paid, in place of cash.

Compound Interest: Interest that is paid or charged on interest that has already accumulated. With compound interest, your savings account earns interest on your original deposit PLUS the interest it has already earned.

Counterfeiting: Making an illegal copy of something valuable, like money, and pretending that it is real.

Credit: Money that is due to someone, or money that is added to an account. In accounting terms, the opposite of debit.

Credit Card: A plastic card, issued by a bank, which allows people to buy things without cash. Money spent on a credit card is a short-term loan from the bank, and credit card users must pay the money back over time.

Currency: The physical form of money, also called cash.

Debt: Money that is owed to someone after a loan is made. If you loan $5 to your friend, that friend has a debt owed to you.

Debit: Money that someone owes, or an amount that is subtracted from an account. In accounting, the opposite of credit.

Deposit: Money put into a bank account.

Fee: The price charged by a bank for "extra things" like traveler's checks or safe deposit boxes.

Income: Money you receive.

Interest: The fee for using money, usually a set percentage of the money. In savings accounts, the bank pays the saver interest; in loans, the borrower pays the lender interest.

Investing: Money spent to make more money. Investments in a business are called capital. You can invest in a business by buying stocks. Investing can be risky, so you should make sure you know a lot about anything you invest in.

Minting: Making money by stamping metal, to create coins.

Overdraw: To write checks against your account for more than the balance in it..

Percentage: A fraction of something, always divided by 100. One percent is 1/100th, ten percent is 10/100ths, and so on.

Period: The amount of time used to figure interest and record activity, usually one month.

Principal: An amount of money before interest is added. For a loan, it is what you owe before finance charges; for a deposit, it is the amount of money before you earn interest.

Profit: The money left over after a business pays its bills, or income minus expenses.

Register: The written record kept of all deposits and withdrawals for your account..

Service Charge: Money you pay the bank for keeping a certain type of account or, for instance, overdrawing an account.

Simple Interest: Interest that is paid only on principal, and not on the extra interest earned.

Statement: A written list sent by the bank of what you put into and take out of your account including the current balance in your account.

Term: The amount of time money is on deposit (often refers to a CD), or the length of time you have to repay a loan.

Transaction: Any change or activity in your account, such as a deposit or withdrawal.

Transfer: Moving money from one account to another.

Withdrawal: Taking money out of an account.

Yield: The amount of money you earn on an investment, figured as a percentage of the amount you invested.