Banking terms can sometimes feel confusing, but understanding them can help you manage your money better. Here are some common terms you might hear when dealing with banks:
- ACH (Automated Clearing House)
A system that moves money between bank accounts electronically across the United States.
- ACH Credit
Money that is electronically transferred into your bank account.
- ACH Debit
Money that is electronically taken out of your bank account.
- Account Balance
The amount of money in your account after all deposits and withdrawals have been made.
- APR (Annual Percentage Rate)
The cost of borrowing money (like on a loan or credit card) or the interest you earn on a savings account, shown as a percentage over a year.
- APY (Annual Percentage Yield)
The total amount of interest earned on a savings account in one year, including compound interest.
- ATM (Automated Teller Machine)
A machine where you can check your balance, deposit or withdraw cash, transfer money, or pay bills using your bank card.
- Available Balance
The amount of money you can spend or withdraw from your account after pending transactions have been processed.
- Availability Date
The date when you can start using money that you deposited into your account.
- Bank Statement
A list of all the money going in and out of your account over a certain time period, usually one month.
- CD (Certificate of Deposit)
A savings account where you agree to leave your money for a set time and earn a higher interest rate. You may have to pay a penalty if you take the money out early.
- Check
A written order telling your bank to pay a certain amount of money to someone from your account.
- Checking Account
A bank account where you can deposit money and pay bills or make purchases with a debit card, check, or online.
- Compound Interest
Interest calculated on both the money you originally deposited and the interest you have earned.
- DDA (Demand Deposit Account)
An account like a checking or savings account where you can withdraw money without needing to give advance notice.
- Debit Card
A card connected to your checking account that lets you pay for things or take out cash at ATMs. The money is taken out of your account right away.
- Direct Deposit
When money is automatically deposited into your account, like your paycheck or government benefits.
- Endorsement
Signing the back of a check to approve it for deposit or cashing.
- FDIC (Federal Deposit Insurance Corporation)
A government agency that protects your money in the bank. If your bank fails, the FDIC will insure your deposits up to a certain amount.
- FDIC Insurance
Protection for your money in case your bank goes out of business. It covers up to $250,000 per account type at FDIC-insured banks.
- Insufficient Funds
When there isn’t enough money in your account to cover a purchase or payment. The bank may charge you a fee if this happens.
- Joint Account
A bank account shared by two or more people. Any person on the account can deposit or withdraw money.
- Money Market Checking Account
A mix of a savings and checking account. It pays interest, but limits how many checks you can write each month.
- Money Market Deposit Account
A type of savings account that usually pays a higher interest rate but may require a higher balance. There may be limits on how many times you can take money out each month.
- Outstanding Check
A check that you wrote, but the person or business hasn’t cashed or deposited it yet.
- Overdraft
When you spend more money than what is available in your account. The bank may charge you a fee.
- PIN (Personal Identification Number)
A secret number you use with your debit card to access your account at an ATM or when making purchases.
- Routing Number
A number used to identify your bank for things like direct deposits or automatic payments. It’s found at the bottom of your checks.
- Savings Account
A bank account where you can save money and earn interest. Some savings accounts may limit the number of times you can withdraw money each month.
- Wire Transfer
A fast way to send money electronically to someone else, either within the U.S. or internationally. Once a wire transfer is sent, it usually can’t be canceled, so be sure you have the correct details.
These terms are key to understanding how your bank account works and making the best decisions for your money.
Have questions or need assistance?
If you have questions or need assistance with your banking needs, please speak to one of our knowledgeable staff at your local Bar Harbor Bank & Trust branch. We’re here to help you build a solid financial future.
