Glossary of Common Banking Terms
Annual Percentage Rate (APR): the percentage of interest you will pay on the unpaid balance of a credit card or loan over the course of one year
Annual Percentage Yield (APY): the percentage of interest earned on a savings account
Automated Teller Machine (ATM): a machine at which you can withdraw cash, make deposits, get balances, and transfer money between accounts
Balance: (1) the amount of money remaining in a bank account; (2) the unpaid portion of a bill
Cashier's or Certified check: a personal check that your bank guarantees it will honor
Checking account: a bank account from which money may be withdrawn by writing a check
Collateral: property pledged to a lender by a borrower as a backup source of loan repayment
Credit card: a card that may be used instead of cash for some purchases, of which at least a portion must be paid each month with interest accumulating on any unpaid balance
Credit rating: a rating compiled from the data in one's credit report which is used by banks and other businesses to determine the level of credit risk a person represents.
Credit report: a report that provides information on where you work and live and how you pay your bills
Debit Card: a card that may be used instead of cash for some purchases. The funds are deducted from the available balance in your checking account.
Debt: the amount of money you owe to other people or businesses
Deposit: to put money into a bank account
Finance charge: money you pay in the form of interest on the unpaid balance of a bill
Gross pay: the amount of money you are paid before any deductions are taken
Income: the total amount of money you earn from employment and other sources
Interest: the percentage you earn from your deposits in a bank account or the percentage you pay on a loan
Loan: money that you borrow and then pay back in installments over a set period of time
Minimum balance: the least amount of money that you can have in a bank account
Money order: a check that may be purchased with cash at a bank or post office
Paycheck: a check by which you are paid a wage for regular employment
Pay stub: a detachable portion of a paycheck, which you keep for your records after depositing the paycheck in the bank
Payment guarantee: an assurance that you have enough funds available to cover the amount of a check
Personal check: a check for personal use that has your name and address on it
Principal: an amount of borrowed money, not including interest
Salary deductions: money taken out of your wages for federal, state, and local taxes, as well as for Social Security and other benefits (such as, health insurance and pension funds)
Savings account: a bank account that pays interest on the money deposited in it
Take-home pay: the amount of money remaining in your paycheck after deductions (taxes, Social Security) have been taken (also called net pay)
Term: the period of time within which a loan must be repaid
Transfer: to withdraw money from one account and deposit it in another
Withdraw: to take money out of a bank account