/    /  Vocabulary: Banking Services

Vocabulary: Banking Services

Vocabulary: Banking Services

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The Vocabulary:

APY– Annual Percentage Yield — The true or effective rate of interest when compounding is taken into effect

ATM– Electronic terminals located on bank premises or elsewhere, through which customers of financial institutions may make deposits, withdrawals, or complete other transactions as they would through a bank teller

Canceled check– Checks the bank has processed

Cash machine– See ATM

Cashier’s check–  A check written by a bank on its own funds in exchange for payment by an individual

CD– A time certificate representing a sum of money deposited for a set length of time, such as six months

Checking account– A banking service wherein money is deposited into an account and checks are written to withdraw money as needed

Commercial bank– An institution which accepts deposits, makes business loans, and offers related services

Compound interest– Interest earned on both principal and interest

Credit union– A member-owned and controlled not-for-profit financial cooperative that offers a variety of savings and lending services to members

Debit card– A plastic card that consumers may use to make purchases, withdrawals, or other types of electronic fund transfers; use of a debit card generally results in an immediate transfer of funds

Direct deposit– The deposit of funds directly into a bank account as a form of payment

EFT– Electronic Funds Transfer – transferring funds electronically rather than by check

FDIC– Federal Deposit Insurance Corporation – Provides deposit insurance which guarantees checking and savings deposits in member banks up to $100,000 per depositor

 Fees– Charges for services rendered

Finance company– A company that makes loans to businesses and/or individuals

 Money market account– A bank deposit that pays interest and that allows a saver to withdraw money at will, often by writing checks

NSF– Not sufficient funds – a check written without sufficient money in an account to cover it

Overdraft– A check written without sufficient money in an account to cover it

POS Terminal– A point-of-sale terminal serves as a computerized cash register; it can track orders, accept credit cards and debit cards, and keep inventory, among other things

Reconcile– Adjusting one’s checkbook balance to match one’s bank statement

Savings– The process of setting aside money until a future date instead of spending it today. The goal of saving is to provide funds for emergencies, short-term goals, and investments

Savings & Loan– Financial institutions that provide loans and interest-bearing accounts. Accounts in federally chartered S&Ls are federally insured

20/10 Rule– One should never borrow more than 20 percent of one’s yearly net income, and payments should not exceed 10 percent of monthly net income

3 C’s– Used by creditors to measure the credit-worthiness of potential customers, the three C’s are: capacity, character, and capital