Do you think you know everything there is to know about banking? While you may have a checking and savings account, there are some terms that are specific to the financial industry that you may not be familiar with. Here are the top banking terms you should know.
- Routing Number: Your routing number is the unique nine-digit numeric code that identifies your bank. Your routing number is critical when setting up direct deposit for things such as your paycheck or Social Security check.
- ACH: If you want to make a payment online, it must be done through the Automated Clearing House (ACH) system. The ACH system allows money from your checking account to be transferred electronically. There is no faster way to receive or send money electronically than with the ACH system.
- Wire Transfer: You must use a wire transfer when you need money to be transferred immediately. Your bank will require that you fill out some paperwork before conducting the wire transfer, so it is essential that you are aware of this term.
- APY: When you consider opening a savings account, you should look for one that offers an APY. The Annual Percentage Yield is the effective interest rate earned on your deposit in one year.
- FDIC: The Federal Deposit Insurance Corporation (FDIC) is a United States government agency that protects your money if your bank fails.
- Interest Rate: Every loan has a different interest rate, so it is vital to consider the amount of money you have to borrow versus how much it will cost in interest.
- CD: When you need access to your money but don’t want to risk losing any of it, a Certificate of Deposit (CD) is a safe bet.
- IRA: An Individual Retirement Account is designed for future retirement savings. It offers tax advantages, but it also comes with specific regulations designed to protect your investment.
Knowing these top terms will help you be a more informed banker! What would you add to the list?