Banking Terms to Know

paper and pen with important banking and finance terms

The banking industry is full of different terms. Let us help you make sense of them.


Banking terms you should familiarize yourself with.

Below is a handy glossary of basic banking terms you should familiarize yourself with so you can navigate through the personal finance world with ease and confidence.

Overdraft Privilege:

An opt-in service that allows you to overdraw your checking account, when you do have enough funds, through a debit card or ATM transaction. Your financial institution will typically pay for transactions, up to a pre-determined limit, at their discretion. A fee is charged each time an overdraft is paid and fees can range from $10-$38 or more depending on your financial institution.

Overdraft Transfers:

An opt-in service that will cover a transaction, made through your checking account when you do not have enough funds available. A linked savings account or line of credit may be used to cover any overdrafts that may occur, for a small fee that is less than an overdraft privilege fee. When you have an overdraft, funds will automatically transfer to your checking account from the linked savings account or line of credit you selected.

ABA Number:

Also known as the routing number or routing & transit number. This is a nine digit number that identifies your financial institution. The ABA number is needed when setting up direct deposit, an automatic payment, wire transfers and more. The ABA is the GPS to find your financial institution so your funds don’t end up in the wrong hands.

Shared Branching:

Shared Branching is a network of Credit Unions that work together to allow members to handle transactions at another Credit Union across the nation. You are able to conduct deposits/withdrawals/payments/balance Inquiries on your FCCU account at a partner credit union wherever you are. If you’re in New York and need to make a deposit to your FCCU account, simply find a Credit Union that is part of the Shared Branch network and you will be set. 

Regulation D:

Regulation D is a Federal Regulation that limits the number of automatic or preauthorized transactions (including overdrafts) that can be completed per month from a non-transaction based account (Savings). This regulation applies to all financial institutions and sets a limit of 6 such transactions per calendar month. 

APR:

Annual Percentage Rate. The cost of credit on a yearly basis, expressed as a percentage. 

APY:

Annual Percentage Yield. A percentage rate reflecting the total amount of interest paid on a deposit account based on the interest rate and the frequency of compounding for a 365-day year.

Compounding Interest: 

Interest calculated on the principal sum of a loan and also on the accumulated interest of previous periods. In other words, compound interest is interest on interest.

Simple Interest:

Interest calculated on the principal, or original, loan amount.

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