Banking Vocabulary
Annual Percentage Rate – the rate of interest being charged for a loan over a year’s time
ATM (automated teller machine) – a machine that accepts deposits and withdrawals, as long as there is money in the account associated with the ATM card
Balance – the total amount of money you have in your bank account
Bank – a business that keeps money for customers, makes loans and provides other money-related services
Bank Account – a safe place to keep your money, where it can earn extra money
Bank Statement – a monthly summary of the deposits and withdrawals associated with a customer’s bank account
Budget – a plan you create to control your spending and manage your personal finances
Certificate of Deposit (CD) – a type of investment that requires you to invest your money for a certain length of time and guarantees the same rate of return (interest rate) for that entire time. CDs usually require a minimum deposit and they pay an interest rate slightly higher than a savings account. If you withdraw money from it early, you pay a penalty.
Check – a method of payment in which money is drawn from an account
Checking Account – a bank account that account holders can write checks or use debit cards against the balance to pay merchants
Collateral – a condition of some loans. A banker may require you to back up a loan with something of value. If you are purchasing a house, the house itself is collateral
Compound Interest – interest that is calculated not only on the money you originally invested, but also on any interest the investment has already earned
Credit – money loaned, usually for a fee, that must be paid back
Credit Card – a plastic card used to make purchases up to the credit limit, interest on the balance will be calculated from an annual percentage rate (APR). Credit card loans are not free money, but an unsecured loan
Credit History – a record of your borrowing and paying habits
Debit Card – a plastic card that works just like a check, only the processing time is usually faster. Money spent is automatically taken out of the linked account, usually a checking account. If the account does not have the funds available for the transaction, the purchase can be denied or accepted with an understanding that there will be overdraft fees
Debt – money owed to others
Deposit – adding money to your bank account
Down Payment – a deposit you make on a large purchase. The down payment reduced the amount you need to borrow
Expense – money a person pays to buy something or pay for services
Income – money a person earns or receives
Interest – the money a bank pays depositors for using their money, or the money a person pays when borrowing money
Invest – to put your money into CDs, money market accounts, mutual funds, savings accounts, bonds or stocks to help your money grow in value and earn a profit
Money – paper and coins that are used to buy things
Need– something you must have in order to live
Price – the amount of money required to purchase something
Principal – the amount you are borrowing on a loan or the original amount of money invested
Product – toys, clothes, games, food or anything you purchase
Risk – the chance of losing your money
Saving – keeping your money for a future goal instead of using it to buy products and services
Services – people or companies who perform tasks for others. Example – getting your haircut in exchange for money
Secured Loan – a loan that is backed up with collateral, such as a home or a car
Share – a unit of ownership in an investment or company
Spending – using your money to buy products or services
Stock – a certificate representing a share of ownership in a company
Unauthorized Purchases – those purchases made by someone other than you with your debit card, credit card or checks. If you can prove that you did not authorize the purchase, the bank will refund your money
Unsecured Loan – a loan not backed by collateral. Example – a credit card
Want – something you would like to have, but do not need in order to live
Withdrawal – taking money out of a bank account
