Financial Education: Bank On It

Banking Basics | What is a Bank | Choosing a Bank | Accounts | Glossary | Resources

Banking Industry Glossary of Terms

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Terms Definitions
Account Verification Before opening an account, most banks will review your history of using checking accounts through companies such as TeleCheck or ChexSystems. Some banks will run a full credit report to determine the level of risk.

The account information is collected from financial institutions. If you have a history of bouncing checks or misusing your accounts, financial institutions may not open an account for you.
Automated Teller Machines
This is a computer where you can deposit, withdraw, or transfer money from one account to another 24 hours a day. Use of an ATM requires a card issued by the bank and a personal identification number (PIN). A PIN is a special password or set of numbers to use your debit or ATM card. The PIN is used for security purposes, so no one else can access your account.
Balance Balance is the amount of money you have in your bank account.
Bank A bank is a business that offers you a place to keep your money and uses it to make more money. Banks offer you different services for keeping your money.
Branch Manager A branch manager is the person who supervises the bank operations and helps fix problems that cannot be solved by other bank employees.
Cashier's Check For a cashier's check, you provide cash or money from your account in the amount of the check plus a service charge (usually form $2 to $5). You also tell the institution who is receiving the check. The institution writes a check (also called a bank check or teller's check) for you. This check is guaranteed not to bounce. A cashier's check is available from financial institutions.
Certified Check A certified check is a check you write and take to your financial institution. The bank will mark it "certified" for a fee (usually $2 to $5) and place a hold on the money in your account until the check is processed. A certified check is guaranteed not to bounce.
Checking Account A checking account is an account that lets you write checks to pay bills or to buy goods. The financial institution takes the money from your account and pays it to the person named on the check. The financial institution sends you a monthly record of the deposits made and the checks written.
Credit Card A rectangular piece of plastic used instead of cash or checks authorizing payment for goods and services.
Credit History Record of how a consumer has paid credit accounts in the past, used as a guide to determine whether the consumer is likely to pay accounts on time in the future.
Credit Report A record or file to a prospective lender or employer on the credit standing of a prospective borrower, used to help determine credit worthiness.
Credit Union A nonprofit financial institution owned by people who have something in common. You have to become a member of the credit union to keep your money there.

Debit Card A debit card is a plastic card sometimes called a "Check Card". The debit card has a MasterCard® or Visa® logo and a magnetic strip on the back that allows you to pay for goods and services at stores and other businesses that accept MasterCard or Visa credit cards.

The debit card also functions as an ATM card. With ATM Cards, you can make deposits to or withdrawals from your checking account at ATMs. Most debit cards require a PIN if you use the card as an ATM card.
Deposit Products Deposit Products are bank accounts that allow you to add money to the account. Checking and savings accounts are two examples of deposit products.
Direct Deposit Direct Deposit is one method your employer or a government agency might choose to give you your paychecks or benefits checks. With direct deposit, your paychecks or benefits checks are electronically transferred and directly deposited into your account. The amount of money is immediately available Some banks will not charge the monthly fees if direct deposit is used.

Fees Financial Institutions may charge you different fees for different services. For example, a monthly maintenance fee might be charged for keeping your account open. In addition, you might also be charged a penalty fee if you misuse your account, such as by bouncing a check.

Interest Interest is the extra money in your account that the bank pays you for keeping your money. One of the main advantages of having a deposit account is the interest you earn.

Judgment The official court decision of an action or suit. This public record may be listed on a credit report in matters of money and debts owed.

Loan Officer The loan officer is the person who takes applications for loans offered at the bank. The officer can answer questions for you, provide written information explaining loan products and help you fill out a loan application.
Loans A loan is money you borrow from a bank with a written promise to pay it back later. Banks charge fees and interest. This is extra money you pay to borrow the money. You can talk to the customer service representative for more information about loans offered at a bank.

Money Order A money order is similar to a check. It is used to pay bills or make purchases when cash is not accepted. Many businesses sell money orders for a fee. If you need to use a money order, it is best to shop around for the best price.

Non-deposit Products Many banks also offer non-deposit products and services that are not insured by the FDIC. Stocks, bonds, and mutual funds are examples of non-deposit investment products.

Bank personnel are supposed to provide a written explanation that the FDIC does not insure these products and the money you invest might lose value. You can find out more about these non-deposit products at your bank.

Savings Accounts A savings account is an account that always earns interest. You cannot write checks on a savings account. You can open a savings account with a few dollars, but you might pay a monthly fee if the balance is below a certain amount. The bank will help you keep track of your account by either sending you a statement or providing you with a booklet called a passbook.

Telephone Banking Telephone banking allows you to:
  • Check your account balance by phone
  • Transfer money between accounts
  • Obtain account history, such as most recent deposits or withdrawals
  • Stop payment on a check
  • Obtain information on branch hours or other information, and
  • Report a lost, stolen, or damaged card
Teller The teller is the person behind the counter who takes money, answers questions, cashes checks, or refers you to the person who can help you. You can go to any teller in the bank.
Thrift A thrift is a savings bank or savings and loan association that is similar to a bank. Thrifts were created to promote home ownership and must have a majority of their assets in housing-related loans.

Wire Transfer A wire transfer is a method of electronically transferring money from one bank to another.
Withdrawal A withdrawal is the process of taking money from your bank account. You do this by writing a check, using an ATM, or by giving a teller a withdrawal slip. A withdrawal slip looks similar to a deposit slip, except you are taking money out rather than adding money to your account.

You need to be sure you do not withdraw more money than you have in your account. If you do, you will be overdrawn, or bounce a check, and be charged a fee.