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