Money Management Glossary: Personal Banking Terms
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- ABA
- ABA stands for: American Bankers Association.
- ACH
- ACH stands for: Automated Clearing House. ACH Services is the national electronic payment system widely used for collection and/or disbursement of funds including automatic payroll deposits.
- APR
- APR stands for: Annual Percentage Rate, and denotes the true cost of borrowing money -expressed as a yearly percentage rate.
- APY
- APY stands for: Annual Percentage Yield. APY denotes the amount of interest earned on a deposit (checking, savings, money market, CD, IRA) account, expressed as a yearly percentage.
- ATM
- ATM stands for: Automated Teller Machine
- Auto Pay
- The phrase "Auto Pay" usually refers to a banking service that allows an account holder to make monthly payments automatically from a bank account.
- Automatic Deposit
- Automatic Deposit denotes the electronic deposit of money (such as wages or benefits) directly into a person's bank account.
- Automatic Payment Plan
- The phrase "Automatic Payment Plan" denotes an arrangement authorizing periodic withdrawals from a checking or savings account to pay bills. Often used for making regular monthly payments such as for rent, mortgages, and utility bills.
- Automatic Savings Plan
- The phrase "Automatic Savings Plan" refers to a savings plan in which funds are automatically (on a pre-set schedule) deposited into a savings or money market account.
- BA
- BA stands for: Bankers Acceptances. A BA is a time draft (a negotiable instrument) usually arising out of a trade transaction. BAs "drawn on" and "accepted" by a bank are payable at a date of up to 180 days in the future.
- Cap
- The term "Cap" usually refers to the highest interest rate allowed on a floating-rate bond, or the highest rate that an adjustable interest rate loan can rise to within a specified period of time.
- Cash Concentration
- Cash Concentration is an electronic service (via Automated Clearing House or ACH) that allows funds to be moved across accounts belonging to different financial institutions.
- CD
- CD stands for: Certificate of Deposit. It is an interest-bearing deposit account that requires that the funds remain deposited for a specific period of time. Most CDs are subject to early withdrawal penalty.
- CESA
- CESA stands for: Coverdell Education Savings Account. Even though a typical CESA is a tax-exempt savings account for qualified education expenses for a designated beneficiary under the age of 18 only, it does allow for the age limit to be waived for special needs beneficiaries.
- Checking Account
- The phrase "Checking Account" denotes a bank account that allows the account holder/owner to make withdrawals by using a written, negotiable financial instrument -often referred to as a "check" or a "cheque".
- Check Safekeeping
- The phrase "Check Safekeeping" refers to a service offered by some banks wherein instead of returning your cancelled checks with your monthly statement, the bank would keep copies of your checks (in a safe/secure digital archive) for your future references.
- Combined Statement
- The phrase "Combined Statement" denotes a monthly bank statement detailing the account activity for multiple accounts -with each bank account listed separately.
- Debit Transaction
- The phrase "Debit Transaction" describes a transaction (such as a withdrawal made using an ATM card, a Visa® Check Card, or a Point-of-Sale/POS transaction) that results in funds being deducted directly from your account.
- Demand Deposit
- The phrase "Demand Deposit" describes type of an account that allows the balance to be drawn upon without prior notice.
- Direct Deposit
- The phrase "Direct Deposit" described electronic transfer of funds from an outside source into a deposit account.
- EDI Reporting
- Electronic Data Interchange (EDI) Reporting service provides payment-related information of various Automatic Clearing House (ACH) transactions.
- Escrow Account
- Held by the lender/servicer, Escrow Account (a.k.a. Impound Account) allows a borrower to make periodic (monthly) installment payments (for property taxes, insurance, and other costs, etc.) which are then disbursed by the lender/servicer as those obligations become due.
- Estimated APR
- The phrase "Estimated APR" denotes a pre-application estimate of the total cost (expressed as an Annual Percentage Rate) of a loan (including interest and various costs such as loan initiation fees, insurance costs, etc.) divided over the anticipated life of the loan. The Estimated APR provides a good approximation, but the actual Annual Percentage Rate (APR) for a loan may be different.
- EXIMBank
- EXIMBank (Export-Import Bank) was established by US Congress to provide credit and insurance to US exporters in order to promote export of goods and services from the United States of America.
- Export Letter of Credit
- Export Letters of Credit (Export LoC) allow customers to receive timely payment before they have to release title to goods.
- FDIC
- FDIC stands for: The Federal Deposit Insurance Corporation -an entity that protects bank customers for up to a total of $100,000 -provided the insured (financial/banking institution) deposits the funds with a FDIC insured institution.
- FDIC Insured
- FDIC Insured consumer deposits (such as Checking, Savings, Money market accounts, CDs, and the interest earned on such deposits) are protected (for up to a total of $100,000) by The Federal Deposit Insurance Corporation.
- Routing Number
- The term Routing Number denotes a number sequence pre-printed at the bottom of all checks that uniquely identifies a financial institution. The first sequence of numbers indicate the Federal Reserve Routing Region, the next four numbers being the ABA assigned institution identifier, and the last sequence of numbers indicates the checking account number issued by the client's financial institution.