Financial ABC’s

19/07/2010

in Articles

Lingo of the financial gringos

account – a Number in a bank’s system where your money movements are registered and tracked.

account balance – the amounts of money in an account. How much money you have left in your store

account payment – a payment to another person or business account.

account statement – the monthly record of transactions witdraw or deposit) on your account balance.

administration fee – a fee charged by the banks to cover thier costs

affiliate card – a card issued by a bank. Linked to a pre determined club, group or charity which benefits a small % when you use the card for purchases Identification

APR – Annual Percentage Rate. The yearly cost of a loan expressed as a percentage

ATM – Automated Telling Machine. A machine which enables you to do basic banking transactions (such as withdrawals, transfers and balance enquiries) at anytime from an external machine

balance – the amount of money you have in or owe on your account

bank account – a record of financial transactions with your bank. A bank account is for everyday use and allows your to perform a variety of transactions. Also called a current or cheque account

bank charges – the cost incurred by an account holder whilst running their account for transactions such as payment, withdrawals and deposits. Bank charges are levied by your bank account provider

bank fees – as above, but are often used to specify the regular cost of having a bank account whereas charges relate to the cost specific transactions

basic interest – interest calculated on the original sum only. Also called simple interest and ordinary interest. Compare compound interest

bond – a loan secured to your house as a guarantee. Also called a mortgage or home loan

bounced cheque – a cheque that cannot be paid because of insufficient funds in the account

certified cheque – a cheque which the bank guarantees. A certified cheque cannot bounce

cheque account – an account which allows the holder to make payments by cheque against deposited funds in that account

cheque book – a book of blank cheques

compound interest – interest calculated on the original sum and previously accumulated interest. Compare basic interest

credit card – a card you used to buy on credit (Pay Later)

credit limit – the maximum amount of credit provided by a card

current account – see bank account

debit card – a card that may be used to withdraw money or make purchases using the money in the account that it is linked to

debit order – an authorisation that one gives to a third party that permits the bank to make monthly payments from the user’s account to the third party. Also called stop order

deposit – 1. money paid into the user’s account. 2. money paid in advance to show the customer’s intention to complete the purchase

dishonour – to not pay, for example for a bounced cheque

effective annual interest rate – the actual annual interest rate that takes into account compounding of interest and changes in interest rates

fixed rate – a rate of interest that is fixed at a specific value. Compare variable rate

interest – 1. an amount charged to the borrower for the use of the lender’s money. 2. the return derived from savings or an investment

loan – a sum of money borrowed by the user from a lender, often a bank

minimum balance – the minimum sum that must be held in an account for it to be operational

mortgage – see bond

NCA – National Credit Act, legislation introduced by government regulating how credit and borrowing is provided in South Africa, bringing increased protection for consumers

online banking – a facility enabling users to perform banking transactions via the internet

ordinary interest – see basic interest

overdraft – the extension of an account by a lending institution which allows the user to make payments and withdrawals on credit. The amount the user is overdrawn is the amount by which the debits from the account exceed the deposits into the account. Overdrafts are almost always charged at a fee and a debit interest rate

PIN – Personal Identification Number. A number used to uniquely identify the user

POS device – Point Of Sale device. Enables the user to withdraw cash when making purchases at stores equipped with this device

prime rate – the interest rate set by a bank or lender on which they base their lending rates. So if the prime rate is 12% and a lender charges prime -1 for a mortgage, for example, the rate paid by consumer will be 11%

repo rate – the key interest rate set by the Reserve Bank and the rate at which they lend money to other banks and lenders. A bank’s prime rate will take its lead from the repo rate, so if the repo rate increases, prime rates are likely to follow. Increases in repo rate are usually decided by the Reserve Bank for economic reasons, such as raising it to stem consumer borrowing, or reducing it to stimulate business spending

savings account – an account with limited banking facilities but higher interest rates allowing the user to earn interest on their savings

simple interest – see basic interest

stop order – see debit order

Sub-prime mortgage – A type of mortgage usually given to a borrower with a poor payment record or with a high credit risk. Sometimes known as specialist or non-standard mortgage

transfer – the movement of funds from one account to another

traveller’s cheque – a cheque issued by a financial institution to the user that functions as cash but is protected against loss or theft

variable rate – a rate of interest that varies depending on some other indicator, for example, the prime rate

withdrawal – a removal of your money from an account

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