Banking Terms

Banking Terms

A

Account
A depository or credit relationship between a customer and a financial institution that includes checking, savings, credit or money market agreements.

Account activity
A summary of activity on an account, including starting balance, payments and credits.

Account history
The transaction history of an account over a specified period.

Account number
The unique number given to your current account. You’ll find it on your bank statements and printed as the last group of computer-type figures at the bottom of your checks.

Annual percentage rate (APR)
The cost of credit expressed as an annual rate.

Annual percentage yield (APY)
A percentage rate reflecting the total amount of interest paid on any account, based on the interest rate and compounding for a one-year period.

Assets
Personal possessions of value, including cash, real estate and investments.

ATM fees
Charges assessed by your bank, either by exceeding the transaction limit set by the financial institution based on your account type or as a convenience charge from a bank not associated with the person using the machine.

Automated clearing house (ACH)
The networks used as a means to transfer money electronically between accounts at different institutions, usually in one day.

Automatic payment
A preauthorized payment deducted automatically from an account to pay recurring bills. Payments are usually scheduled for the same calendar day of the month.

Automatic transfer
An arrangement that moves money at certain specified times, often monthly, from one account into a different account.

Available balance
The portion of a customer’s account balance on which the bank has placed no restrictions, making it available for immediate withdrawals.

B

Balance
The amount of money in your current account.

Balance due
That dollar amount representing the sum of the previous balance due plus cash advances and merchandise purchases for the billing period less credit for payments and/or merchandise returned plus any appropriate finance charge.

Balance owing
The amount outstanding.

Bank debits
The sum of all checks and other instruments charged against the deposited funds of a bank’s customers.

Bank identification
A series of digits used to identify a particular bank.

Bankrupt
The quality of a person, corporation or other legal entity who, being unable to meet his or her financial obligations, must relinquish his or her property to a receiver or trustee for administration and distribution to creditor.

Browser
Software used to view web pages. Microsoft’s Internet Explorer and Netscape Navigator are two popular web browsers. A web page displayed in Netscape may look different when opened in Explorer as the browsers have different display features.

C

Cancellation
(1) Voiding of a document by defacement, perforation or other means, whereby restoration is made possible.
(2) Investments: The termination of an insurance contract prior to the end of the policy period.

Certificate of deposit (CD)
A time deposit, FDIC insured to $100,000 per person ($250,000 on retirement accounts), with a fixed maturity date, typically from three months to five years. It usually pays higher interest than a savings account, and a penalty is charged for withdrawing funds before the maturity date.

Credit
Increases in an account (such as a deposit made to the account).

Credit rating
For individuals, credit rating is based on your financial resources and credit history. Your total debt level compared to your income level, timeliness in paying bills, number of credit cards and many other factors are taken into consideration. Credit bureaus use credit scoring to quantify to potential creditors how likely you are to pay back a loan. Consumers can obtain a copy of their credit reports from TransUnion, Experian or Equifax.

Credit score
A number that indicates an individual’s creditworthiness. Credit bureaus determine the score with a statistical program. You are given points for such things as your credit card debt, number of cards, total debt level, and whether you rent or own your home. Even the number of inquiries from potential creditors can affect your score because a high number of inquiries may signal credit problems. Creditors use the score to decide whether to give you a mortgage, issue a credit card or offer a small business loan. A good score can result in a lower interest rate; a poor score can result in a higher interest rate or loan denial.

Current balance
The amount of funds in the account including pending activity. It does not include any funds available from other accounts. Additionally, any holds would not be included in this balance.

D

Debit
Decreases in an account, such as that which occurs when a check is written against that account.

Debit card
A card that allows you to pay for goods in shops and withdraw money at ATMs. Unlike a credit card, which builds up a balance that you should pay off each month, a debit card takes the money from your current account when you spend.

Demand deposit
A deposit that can be withdrawn at any time without advance notice. The most common type is the checking account.

Dependent
A person who is dependent for support upon another, to be distinguished from one who merely derives a benefit from the earnings of another.

Deposit
The process of paying cash and checks into your account.

Direct deposit
Electronic deposit of wages or benefits, such as pension or social security, into a personal bank account; deposits are handled through the automated clearinghouse (ACH).

E

Early withdrawal penalty
A depositor forfeits interest or is assessed a service charge for withdrawing funds from or closing out a time deposit before its maturity date.

Electronic bill
Improves the online bill payment process by allowing users to electronically send and receive bill and payment information using convenient, cost effective, and secure state-of-the-art technology.

Electronic check presentment
Called ECP for short, it captures an electronic image of the check at the point of sale. The image, rather than the paper check, is then processed by banks and clearinghouses. The way it works is that a depositing bank sends the paying bank (or a Federal Reserve Bank) an electronic transmission containing the details of a check, such as the amount, account number and check number, that the deposit in bank will be presenting later in the day or the following business day.

Electronic deposit verification (EDV)
EDV is a customer protection security process for opening accounts online. We electronically send two micro deposits to your linked account at a third party bank. Once you have reported the deposits back to us, we will allow you to transfer funds from your linked account and complete the account opening process.

Electronic Funds Transfer (EFT)
Electronic Funds Transfer. The transfer of money between accounts by consumer electronic systems such as automated teller machines (ATMs) and electronic payment of bills.

Encryption
Security technology that scrambles information sent over the Internet or any other insecure connection, such as an internal network. It involves changing the information into a complex code that can only be deciphered with the correct key. Encryption is vital for Online Banking and Online Bill Payment where account and credit card information needs to be kept secret.

Equal Credit Opportunity Act
A federal law that prohibits discrimination in credit transactions on the basis of race, color, religion, national origin, sex, marital status, age, source of income or the exercise of any right under the Consumer Credit Protection Act.

Extension of credit
The granting of credit in any form.

External accounts
Refers to accounts that owned at another financial institution.

F

Facsimile
An exact copy of a thing, such as a signature or document, by a duplicating process.

Federal Deposit Insurance Corp. (FDIC)
An independent agency of the U.S. government that insures bank and thrift institution deposits of up to $250,000 per depositor.

Fixed rate
A rate of interest that does not vary for the term of the loan or deposit.

Float
The amount of time the bank takes to clear or reject (bounce) a check for payment; the time at which funds are debited from the issuer’s account.

Foreign currency
The money of another country.

Forgery
The alteration of a document or instrument with fraudulent intent.

Full payment
The amount of money owed on a single account that, if paid, will reduce the account to a zero balance.

G

Good faith
A standard of conduct between parties meaning honesty in fact in the conduct of the transaction. As an element of a defense to violations under several statues, a good faith effort to comply means that the creditor did not know about the violation and took reasonable steps to avoid it.

H

High balance
Refers to account upon which the outstanding balance exceeds the authorized credit limit.

I

Image
An exact duplicate array of information or data stored in, or in transit to a different medium.

Indexed rate
The sum of the published index plus the margin. For example, if the index is 9 percent and the margin 2.75 percent, the indexed rate is 11.75 percent.

Insufficient funds
A term indicating that an account balance in inadequate to cover a check that has been written and presented for payment.

Interest
The cost for borrowing a sum of money, or the amount earned on an interest-bearing deposit account, usually calculated at a percentage rate over a period of time. For example, if you borrow $1,000 for a year at an annual interest rate of 10%, you would pay $100 in interest for a year’s use of the money.

Interest income
Earnings on investments such as savings accounts, certificates of deposit and money markets. Banks or other organizations or individuals who pay interest usually report it on Form 1099-INT.

Interest rate
The annual rate paid on an interest-bearing account, such as a savings and CDs, which does not reflect compounding. Different types of accounts pay or charge different rates of interest. The interest paid on an interest-bearing account is usually expressed as an Annual Percentage Yield. The rate charged on a loan is usually expressed as an Annual Percentage Rate.

Interest transfer
A process that allows interest earned in one account to be transferred to another account.

J

Joint account
A bank account held in more than one name, usually by a married couple or partners living at the same address.

L

Late payment fee
Charge imposed on a debtor for not paying on time.

Ledger balance
The balance in an account at the beginning of each day, also known as the current balance. It includes all deposits or transactions that were posted from the previous night, whether or not any money has been collected.

Log in
The procedure by which a customer “enters” an online financial institution. When logging in, customers enter their passwords to gain access to a secure area of the institution’s Web site, where they can view their financial records and take action, such as online bill payment.

M

Mail theft
The stealing of bank cards while they are in process by the U.S Postal Service.

Maturity
The date on which the principal balance of a loan becomes due and payable. It also marks the date when a bond pays its principal.

Minimum average balance to avoid fees
The balance in the account from day-to-day must average this amount when calculated. If the account balance falls below this amount you will be subject to the monthly charge and/or per usage transaction charges.

Money market account
A high-yield savings account, FDIC-insured, that allows depository financial institutions to be more attractive with money market mutual funds.

Mortgage loan
A consumer loan secured by residential real estate, usually the borrower’s primary residence. May be used to purchase or refinance a home or property, with payments usually spread over 15 to 30 years.

N

Non-Nationwide Bank ATM
Any ATM that is not owned and operated by Nationwide Bank.

O

Online banking
A service that allows an account holder to obtain account information and perform certain banking transactions through a personal computer.

Online bill payment
A service that sends money out of your bank account to whoever you wish. In some cases the online bill payment service will actually print a check and mail it to the recipient. If the company you want to send payments to is setup within the banks system, Nationwide Bank will simply transfer the money electronically when you use online bill payment.

Overdraft protection
An arrangement made between you and your bank that allows you to withdraw more than the amount of money in your account.

P

Payees
The people or businesses you issue a check to.

Payer
The party delivering funds.

Periodic rate
The interest rate described in relation to a specific amount of time. The monthly periodic rate, for example, is the cost of credit per month; the daily periodic rate is the cost of credit per day.

Phishing
A scam that uses spoofed e-mails from well-known companies to direct consumers to fraudulent Web sites, where victims unknowingly submit sensitive information directly to scammers. The e-mail’s message usually sounds urgent and falsely claims that the recipient needs to update or verify his or her account to remedy a problem.

PIN
Stands for Personal Identification Number. A PIN is issued with your debit or credit card so that you can withdraw money from ATMs. Don’t forget it and, to help prevent fraud, keep it secret. A PIN should be memorized, never written down and never disclosed to anyone else.

Prime rate
A common benchmark for consumer and business loans set by banks, usually at a level 3 percentage points higher than the Fed Funds rate. The rate given to consumers on their loans is often determined as the prime rate plus a certain percentage, which represents the lender’s assessment of the risk in lending, plus its profit margin.

R

Random generated payment
A quick and easy method of expediting the external account verification process that is required when either registering an external bank account, or funding a new Nationwide Bank account. The process requires verification of two small payments made to an external account, and it is a process that results in faster access to funds.

Return
The profit earned on an interest bearing account, expressed as an annual percentage yield.

Routing number
The first nine numbers that appear at the bottom of a check to identify the financial institution. Nationwide Bank’s routing number is 044072324.

S

Secured account
An account against which collateral or other security is held.

Service charge
Fees charged to customers for specific services or as a penalty for not meeting certain requirements such as insufficient funds in a checking account. Returned or “bounced” check charge. Also referred to as an NSF or non-sufficient funds fee. The amount of money charged to an account holder whose account has insufficient funds available to pay the check, which is returned to the party who cashed it unpaid. (The bank did not advance the funds to cover check.)

Simple interest
Interest computed only on the principal balance, without compounding.

SSL
Stands for Secure Socket Layer. It’s an encryption system designed to protect your credit card and other details when you shop or bank online. In other words, your personal details are scrambled for transfer and decoded at the other end.

Statement
A detailed record of transactions in a bank customer’s account(s) for a certain period, usually each month, which shows debits, credits, transfers, payroll deposits, account balance, check fees, service charges, ATM activity, etc.

Surcharge
An extra cost assessed by the owner of the ATM, associated with using a service, such as an out-of-network ATM. The amount of the surcharge is set by the ATM owner.

T

Term
The time to the maturity of a loan or deposit, expressed in months or years.

Total value
Present worth of account factoring all funds, including funds on hold or pending approval.

U

Uncollected funds
Refers to items deposited in an account that have not yet been collected, or paid, by the bank on which they were drawn.

V

Variable rate
An interest rate that may fluctuate during the term of a loan, line of credit or deposit account, according to changes in an index rate, such as the prime rate or other prescribed criteria.

Visa/PLUS
An interbank network that covers all Visa credit, debit, and prepaid cards, as well as ATM cards issued by various banks worldwide. Currently, there are 1 million PLUS-linked ATMs in 160 countries worldwide.

W

Wire transfer
An electronic payment service for transferring funds by wire. These transfers may be conducted through the Federal Reserve Wire Network or the Clearing House Inter-bank Payments System, among others. Wire transfers are guaranteed funds for the recipient, meaning that the payment cannot be revoked by the sender after the transfer.