Hands on banking
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| 401(k) Plan | A flexible retirement plan for businesses with employees. Investors in the plan don’t have to pay taxes on the income they invest until they withdraw the funds at retirement age.
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| Account | see Bank account
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| Account balance | The exact amount of money contained in a deposit account according to the bank. This figure may be different than the amount shown in your own records because of checks you have written or deposits you have made that have not yet been processed by the fin
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| Account fee | The amount charged by a financial institution for the services they provide in managing the account. This may also be called the monthly service fee.
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| Annual fee | The fee a credit card company charges a credit card holder to use the card for a year. Or, the fee a lender charges a borrower for the use of a line of credit for a year.
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| Automated teller machine (ATM) | A specialized computer used by bank customers to manage their money, for example, to get cash, make deposits, or transfer money between accounts.
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| Bad check | A check that is not paid by a bank because the customer’s account does not have enough money to pay it. Also known as a bounced or returned check. Banks will charge you service fees for each bad check, and writing bad checks can seriously harm your credi
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| Bad credit | A situation in which lenders believe that, due to a borrower’s poor history of repaying his or her debts, further loans to this person would be especially risky.
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| Balance | see Account balance
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| Balance your checkbook | The process of comparing your monthly checking account statement with your check register to make sure that your records and the bank’s records match. Also called reconciling your account.
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| Bank | A financial institution that handles money, including keeping it for saving or commercial purposes, and exchanging, investing, and supplying it for loans.
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| Bank account | A banking service allowing a customer’s money to be handled and tracked. Common bank accounts are savings and checking accounts.
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| Bank statement | A monthly accounting document sent to you by your bank that lists your account balance at the beginning and end of the month, and all of the checks you wrote that your bank has processed during the month. Your statement also lists other deposits, deductio
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| Bounced check | see Bad check
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| Budget | A monthly or yearly spending and savings plan developed by a person, family, or business. A written budget helps people to be better money managers and to prepare for major or unexpected expenses.
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| Canceled check | A customer’s check that the bank has paid and charged against the check writer’s account. Cancelled checks may be returned to the check writer with the monthly bank statement, or they may be kept on film by the bank.
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| Charge card | Similar to a credit card, except that a charge card requires the card holder to pay off the entire balance monthly. See also Credit card.
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| Check | A written order instructing the bank to pay a specific amount of money to a specific person or entity. The check must contain a date, payee (person, company, or organization to be paid), amount, and an authorized signature.
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| Check register. | A small notepad you receive when you open a checking account for the purpose of tracking your checks, deposits, and current balance.
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| Checking account | A bank account that allows a customer to deposit and withdraw money and write checks. Using a checking account can be safer and more convenient than handling cash.
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| Co-signer | A second person who signs your credit or loan application. Just like the borrower, the co-signer on a loan is equally responsible for repaying the debt. Also called a co-borrower.
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| Cost of the loan. | The total amount the borrower pays for a loan, including the amount borrowed (or principal), the total interest paid over the term of the loan, and all loan fees.
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| Credit | When a bank or business allows its customers to purchase goods or services on the promise of future payment. Also used to describe any item that increases the balance in a bank account. Deposits and interest payments are both examples of credits.
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| Credit card | Any card that may be used repeatedly to borrow money or buy products and services on credit. Credit cards are issued by financial institutions, retail stores, and other businesses. A credit cardoffers the card holder revolving credit that can be paid mon
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| Credit history | A written record of a person’s use of credit, including applying for credit, and using credit or loans to make purchases. Also called a credit record.
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| Credit limit | The maximum dollar amount the lender is willing to make available to the borrower according to the agreement between them. For example, if you have a credit card, the credit agreement will usually specify the maximum amount of money you’re allowed to cha
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| Credit record | see Credit history
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| Credit union | A non-profit financial institution that is owned and operated entirely by its members. Credit unions provide financial services for their members, including savings and lending. Large organizations may organize credit unions for their members, and some co
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| Creditor | An individual or business that lends money or extends credit.
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| Currency | Any form of money that is in public circulation, for example, paper bills and coins.
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| Debit card | A special card issued by a bank that looks like and is treated like a credit card; however, when used, the amount of the purchase or cash advance is subtracted from the user’s deposit account rather than drawing on available credit.
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| Debt | Money, goods, or services you owe to others.
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| Deposit. | To put money into your account.
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| Deposit envelope | A printed envelope provided by a financial institution. Customers place cash and checks for deposit into the envelope and record information about the deposit on the outside of the envelope.
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| Deposit slip | A printed form supplied by a financial institution. Customers list the amounts and types of funds (such as checks and bills) they are depositing and include the slip with their deposit.
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| Discretionary expense | The purchase of goods or services which are not essential to the buyer, or are more expensive than necessary. Examples include entertainment and restaurant meals.
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| Earning power | The amount of money a person is able to make from his or her work.
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| Earnings | see Income
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| Economy | Activities related to the production of goods and services in a particular geographic region, such as a country, state, or county.
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| Endorse | To sign the back of a check, authorizing the check to be exchanged for cash or credit.
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| Establishing credit | Giving lenders the trust and confidence to make loans to you based on a good history of paying your debts.
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| Expense | For individuals, an expense is a cost of living for example rent or groceries. For businesses, an expense is any cost resulting from the money-making activities of the business.
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| Federal Deposit Insurance Corporation (FDIC) | An agency of the federal government that insures all bank deposits up to $250,000 per person.
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| Good credit | A situation in which lenders are willing to make loans to an individual, due to his or her good history of repaying debts.
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| Income | For an individual, income means the amount of money received during a period of time, including money received in exchange for labor or services, from the sale of goods or property, or as profit from financial investments. For a business, income is (all
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| Interest | The amount of money paid by a borrower to a lender in exchange for the use of the lender’s money for certain period of time. For example, you earn interest from a bank if you have a savings account and you pay interest to a lender if you have a loan.
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| Interest rate | The amount of interest paid per year divided by the principal amount (that is, the amount loaned, deposited, or invested). For example, if you paid $500 in interest per year for a loan of $10,000, the interest rate is 500 divided by 10,000, or five perce
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| Joint account | A bank account owned by two or more people who are equally responsible for the account
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| Late fee | The charge or fee that is added to a loan or credit card payment when the payment is made after the due date
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| Lender | A business that makes money available for others to borrow.
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| Loan | An agreement between a borrower and a lender, where the borrower agrees to repay money with interest over a period of time.
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| Minimum balance | A specific amount of money required by a financial institution in order to open or maintain a particular account. In some cases, a financial institution may charge the account holder fees, or even close an account, if the minimum balance is not maintaine
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| Minimum payment | The least amount of money to be repaid on a loan or credit card in order to keep the account in good standing.
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| Non-sufficient funds | The lack of enough money in an account to pay a particular check or payment. Also known as insufficient funds. A check with insufficient funds will be returned unpaid to the person cashing it. This has a negative impact on the check writer's history of ha
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| Online banking | A service that allows you to handle banking activities by computer, using the Internet.
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| Outstanding balance | The amount still owed on a bill, loan, or credit line.
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| Overdraft | When there is not enough money in an account to cover a transaction and the bank pays it on your behalf, creating a negative balance in the account that you need to repay.
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| Overdraft Protection | Offered by many banks, overdraft protection is a service that automatically transfers money from a linked account that you select, such as a savings or credit account, when you don’t have enough money in your checking account to pay your transactions.
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| Payee | The person, company, or organization to whom a check is written: a person or company who is to receive money.
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| Payor (or Payer) | The person or company from whose account the money is to be taken to pay a check: a person or company who pays money.
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| Personal identification number (PIN) | A secret combination of letters or numbers you use to gain access to your account through an electronic device such as an ATM.
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| Principal | The total amount of money borrowed, loaned, invested, etc., not including interest or service charges
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| Reconcile | The process used to determine if the balance in your account register matches the balance reported by the bank on your account statement. Also called balancing your account.
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| Register | A small notepad you receive when you open a bank account for the purpose of tracking your deposits, withdrawals, and current balance.
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| Regular savings account | (see Savings account)
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| Risk | The measurable likelihood of loss, or less-than-expected return, on an investment or a loan.
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