Banking Vocabulary

A set of vocabulary flashcards covering key banking terms and definitions.

Checking Account

An account at a bank that allows a customer to deposit money and make withdrawals from the funds on deposit using a paper check or electronic transfer.

Debit Card

A card that acts like an electronic check; with each purchase, the amount is deducted from a checking account.

Overdraft Protection

This protection pays a check even though there are not enough funds in the account; there is a fee for this service.

Debits

Withdrawals from a bank account.

Credits

Deposits or additions into a checking account.

Savings Account

A bank account that pays interest on the money deposited for safekeeping.

Interest Rate

The percent that is paid by a bank to you on money that is in some accounts.

Principal

The balance, or amount of money, in an account, or amount borrowed.

Annual Percentage Rate (APR)

The interest rate paid per year or charged per year.

Money Market Account

An account that pays a higher interest rate than other types of accounts, usually requiring a higher initial deposit.

529 Plan

A savings account that offers tax benefits for savings to pay for certain college expenses.

High-Yield Interest Accounts

Savings accounts that offer higher-than-average interest rates.

Certificate of Deposit

A certificate stating that there is a specific amount of money on deposit and guarantees the payment of a fixed interest rate after a certain period.

Liquidity

Describes how fast a person’s investment can be converted into cash.

Inflation

The continued increase in the prices of goods and services over time.

Purchasing Power of Money

The concept that a given amount of money today won’t buy as much as it did years ago due to inflation.