Decoding Banking Terminologies: A Comprehensive Guide

by Yuvi K - December 16, 2023

Decoding Banking Terminologies: A Comprehensive Guide

Banking may be a complicated subject, but it is a vital part of our everyday lives. Knowing the definitions of basic banking terms can help you make more informed decisions about your finances and how to manage them. This guide provides a comprehensive explanation of common banking terms and concepts. Here, you can find a full list of definitions for the most used terms as well as some related topics.

Types of Bank Accounts

When it comes to banking, the two most common terms are savings and checking accounts.

Savings Account: A savings account is a deposit account where you can store your money and earn interest over time. It is a safe and secure way to invest your money, and you can easily access your funds if you need them. The money deposited into a savings account is generally protected by federal deposit insurance, meaning that the government will cover your deposits up to a certain amount in case your bank fails. The money in a savings account also earns interest at a set rate.

Checking Account: A checking account is a type of bank account where customers can deposit and withdraw funds at will. Checking accounts can be used to access funds for everyday transactions like paying bills or making payments. This type of account is typically used for spending money, rather than saving it.

Bank Fees and Charges

Banks may charge various fees and charges for certain services and activities. It is important to understand these fees and charges so that you can make the best decisions about your banking needs.

Overdraft Fee: This is a fee charged by a bank when a customer spends more money than is available in their checking account. This fee can be a flat rate or a percentage of the total overdraft amount.