A.P.R.: This stands for Annual Percentage Rate, which is a way to measure the cost of a loan on an annual basis. Use the APR to compare the cost of mortgages, for example.
A.P.Y.: This stands for Annual Percentage Yield, and it is a way to measure the value of an investment or deposit by how much money that deposit or investment will earn on an annual basis.
Available Balance: the current balance in an account, minus any holds that might be on your deposits while waiting for a check to clear the bank processing system.
ATM/Debit cards: This card works like a credit card, but the amount of your purchase or withdrawal is taken out of your checking or savings account right away. It is important to keep track of the withdrawals or purchases you make with your card so that you do not overdraw your account and have an overdraft fee charged to you. Most ATM/Debit cards have a maximum daily limit, which means the total amount you can withdraw at an ATM, or the total amount of a purchase, may be restricted.
Learn more about Start Community Bank’s ATM/Debit card.
Checking account: A checking account is a safe and convenient way for you to pay bills and deposit money. To open a checking account you will need a social security number or ITIN and two forms of identification. The bank will provide you with checks and deposit slips. You will be required to balance your checkbook by keeping track of the money that goes in, and the money that comes out.
Learn more about Start Community Bank’s personal checking accounts.
You can track your account activity by receiving a monthly statement in the mail, or by using online E- Statements, or calling a telephone banking center toll free number.
There are many different types of checking accounts. Some free accounts do not have any monthly service charges and may not require you to keep a minimum balance in the account at all times, but do not pay interest . Other accounts may require you to keep a certain balance in the account at all times, but pay you interest. The customer service person at the bank can help you choose the account that fits your specific needs. Most checking accounts offer you an ATM/Debit Card.
Certificates of deposit: A certificate or deposit, or CD, is a deposit investment that usually has a fixed interest rate and a fixed length of time that your money stays on deposit. Because you promise to leave your money with the bank for a certain length of time, the bank pays you a higher rate than a money market account or a savings account. But if you take the money out early there can be a penalty, so make sure this is the right deposit investment for you.
Learn more about Start Community Bank’s CDs.
Compound Interest: Interest earnings for each time period of the investment or deposit are added in to the original principal for future interest calculations, so you earn more that when you are paid simple interest.
Debit: A debit is a term used in accounting and banking which means a charge, or a withdrawal, or a subtraction.
Direct deposit: This is an electronic way of having money due to you – payroll, government checks, benefits – put directly into your bank account instead of waiting for a paper check to arrive in the mail. If you do not have a bank account, you can choose to have the money due to you put on a reloadable or rechargeable check card, sometimes called a prepaid debit card, or a check card.
EFT (Electronic Funds Transfer): This is an electronic payment that is processed through the Automated Clearing House (ACH) system. EFTs take the place of paper checks as a way to transfer money.
E-statements: Using online banking, you can choose not to receive paper statements in the mail and view all of your accounts, all of your account activity, and even the front and back of the checks that you have written by logging into your account using a computer and the internet.
Exchange Rate: The cost to buy currency in one country using the currency of another currency. For example, the cost to buy one euro when you are using US dollars.
FDIC: The Federal Deposit Insurance Corporation provides protection for deposit accounts.
Read more about the protection at Start Community Bank.
Home Equity Line of Credit or Home Equity Loan:
Your home is usually your largest asset, or item of value. Sometimes if you want to do a large repair or upgrade to your home, you might need a loan to pay for it. So a home equity loan lets you use the value in your house as collateral, or a sort of guaranty, for the loan. To be qualified for a loan, first, you need the value in your home to be higher than the mortgage or other loans that might be on the home, and second you need a good credit history.
There is a difference between a home equity loan, and a home equity line of credit, sometimes referred to as a HELOC. A HELOC is a revolving credit, which means you can draw just the amount that you need, and typically the rate you pay on the loan is variable. Typically, the interest rate is based on the prime rate plus a margin. A home equity loan, on the other hand, is usually for a fixed amount and a fixed rate and a fixed term.
Installment Debt: When you borrow money and pay it back in regular amounts over a regular time period, usually monthly, you are using an installment debt. For example, you purchase furniture and pay the furniture company a set dollar about each month until the loan is paid off.
Insured Deposit: Look for the FDIC sign, which stands for Federal Deposit Insurance Corporation, to see if your deposits at a bank are protected if the bank fails.
Liability: an item of value that is part of debt. For example, a mortgage is a liability of the homeowner.
Line of Credit: A line of credit allows a borrower to access funds without applying for a loan every time credit is needed. It is a pre-established amount determined by the bank that can help a business, or a person, cover times when cash flow might be low.
Money market account: This is an interest bearing deposit account that allows you only six withdrawals a month. Because your withdrawals are limited, it sometimes pays a higher rate than a savings account might pay.
Learn more about Start Community Bank’s money market accounts.
A mortgage is a loan to finance the purchase of your home. Your home is collateral for the loan, which is also a legal contract you sign to promise that you'll pay the debt, with interest and other costs, typically over 15 to 30 years.
If you don't pay the debt, the lender has the right to take back the property and sell it to cover the debt. To repay the debt, you make monthly installments or payments that typically include the principal, interest, taxes and insurance.
The word comes from the French 'dead pledge', mort gaige, because the deal dies either when the debt is paid or when payment fails.
Online banking: This is the ability to view and manage your accounts using a computer and the internet. You log on to a special site, enter identification and security information, and can access your account information 24 hours a day, 7 days a week.
Online bill pay: If you pay the same bills month after month, like the electric bill, the heat bill, your car insurance bill, you can set up an automatic method so that these payments are deducted from your account on a regular basis using an electronic check.
Checks that are written on a bank account used to be called drafts. So if you “over – draft” this means that you have written a check that is over the balance in your account.
If you have an agreement with the bank to cover any overdraft you might make, called an overdraft line of credit or overdraft line of protection, the bank will tap that pre-arranged loan and pay the check. If you do not have a line in place, the bank most likely will return the check as drawn on insufficient funds, and then charge a fee.
PIN (Personal Identification Number): It is a private code used by a consumer or account holder to verify identity. You need a PIN when using an ATM machine, for example.
Learn more about Start Community Bank’s ATM/Debit card.
Personal loans: This is a loan that is given without collateral, which means that you do not have to pledge a home, or a car, or a boat, or an item of value to guaranty repayment. The loan usually has a higher interest rate than a secured, or collateral loan. A personal loan usually has a short time limit for repayment.
Revolving Debt: This is a loan that does not have a fixed payment. Most credit cards, for example are considered to be a form of revolving debt. Monthly repayments are usually a percentage of the outstanding balance and must be made on a regular basis.
Savings account: A savings account is a place that you can store money until you need it. Many people have an automatic savings plan and put a little money away on a regular basis and save for a special short-term goal, like to buy a new car, or pay for a new item like a TV or furniture. Some people use savings accounts as a way to save for a long term goal, like a vacation, or a down payment on a home, or for retirement. It is important to compare the interest rate on different savings accounts to make sure you are earning a good return.
Some banks pay a tiered rate on savings accounts, which means the more money you have in the account, the more interest you can earn.
Learn more about Start Community Bank’s savings accounts.
Simple Interest: Unlike compound interest, an account that pays simple interest does not credit any interest earned back into the principal, so interest is earned on the original amount of the balance only.
Telephone Banking: This is a service that many banks offer. You can call a toll free number, enter an ID code and your account number, and hear a recording that tells you information about the balance in your account and recent transactions like deposits and checks that have been deducted from your balance. Many banks offer this service in a variety of languages. The service is usually available 24 hours a day, seven days a week.
Click here to learn more about Start Community Bank’s Telephone Banking Service.
Underwrite: To determine the risk associated with a loan and then to issue the loan.
Variable Rate: An interest rate that might change over the life of a loan or investment. The rate may be tied to a special index that reflects changes in the financial market. Other loans or investments might have a fixed rate, which means a rate that does not change.
Withdraw: To remove funds from a bank account.
Yield: The return, or the amount you earn, on an investment or bank account.