Manage your money better when you know these terms
When it comes to checking and savings accounts, the unique jargon gets confusing. Here’s a list of some common banking terms and easy-to-understand definitions to help you build confidence and make better decisions with your money.
Annual Percentage Yield (APY)
The rate of return earned in your account over a year (365 days) accounting for how often the interest is compounded.
ACH Payment
An electronic transfer of money between institutions through the Automated Clearing House (ACH) network. A direct deposit of your paycheck would be an ACH payment into your account. An automated bill payment would be an ACH payment out of your account.
ATM Network
A network of automated teller machines (ATMs) where you can make a transaction, like withdrawing cash from your accounts. A bank usually has its own network or has an agreement with another network, allowing you to use its ATMs for free. If you use an ATM outside of these, you will likely pay a fee to that network and your bank.
Compounding Interest
Earning interest on the money you deposited into your account as well as the interest that money earns. Interest may be compounded daily, weekly, or monthly. The more frequently it compounds, the faster your money grows.
Debit Cards
A payment card provided by your bank that allows you to purchase items using funds from your checking or savings account. Unlike a credit card, the money is deducted directly from your account when you use the card.
Deposit Slip
A free paper form used when making a deposit at a bank. It shows the total amount and whether you are depositing checks, cash, or both.
Direct Deposit
An electronic payment (ACH) into your bank account. The most common example is having your paycheck automatically deposited into your bank account.
FDIC Insurance
The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the United States Government that protects member institutions’ deposits of up to $250,000 per depositor. Member banks will display a “Member FDIC” logo at their locations, on their website, and in their advertising.
High-Yield Account
An account that pays a higher interest rate. Some accounts may limit the number of monthly withdrawals.
Insufficient Funds
Also known as non-sufficient funds (NSF). It indicates the status of an account that doesn’t have enough money to cover a transaction.
Maintenance/Service Fees
A charge for maintaining and servicing your checking and savings accounts. This may include a monthly service fee, a paper statement fee, or a penalty for not meeting certain account requirements, like a daily minimum balance or using eStatements
Mobile Check Deposit
Also known as remote deposit capture. Using an institution’s mobile app to deposit a check by submitting a picture of the front and back of the check with a written endorsement. Endorsement includes your signature and “for mobile deposit only at Institution Name” written on the back.
Overdraft fees
When you make a purchase by check or debit card that is more than the amount available in your account, it’s called an overdraft. The bank will temporarily lend you the money to cover the purchase, but you’ll be penalized with an overdraft fee.
P2P payments
Peer-to-peer (P2P) payments transfer money digitally between your account and another person’s account. This feature is typically available in your banking app or you can use a third-party app like Venmo. If you carry a balance in third-party apps, FDIC insurance may not apply.
Statement
A monthly summary of all the transactions in your account.
Stop payment
A request from you to your institution to not process payment on a written check or an ACH debit. Most banks charge a fee for stop payment orders.
To learn other terms and better manage your money, download our free Mastering Money eBook. As always, if you have any questions, don’t hesitate to reach out to any of our friendly bankers.
