Banking Key Terms
Understand banking terms to ensure you are managing your finances appropriatelyAnytime you deal with finances or investments, terms are bound to creep up that you don't fully understand. However, in order to make an informed decision about money matters, you have to understand all terms in documents and/or terms that are spoken.
Whether you are applying for a mortgage, opening a bank account or opening an investment account, you should be scrutinize the documents to ensure you understand each and every line of the document. This is true for truth in lending disclosures, privacy disclosures and account terms documents.
Passbook loanA passbook loan is a loan secured by a CD or savings account. Unlike a regular loan, these usually don't involve a credit check or credit reporting.
Average daily balanceTo compute the average daily balance, you must add all of the actual daily balances then divide that total by the number of days in the billing cycle.
Finance chargeA finance charge is money that a bank or other lender charges to loan money. According to the Truth in Lending Act, any finance charges must be disclosed up front.
Cashier's checkA cashier's check is a check that is paid by a bank with money received from a customer prior to issuing the check. It can be likened to a pre-paid check.
Certificate of depositA certificate of deposit is a low interest bearing investment account. It is issued by a bank and is held for a specific duration before the interest is matured.
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