Remember the first time your dad made you file your own taxes? Or when your mom made you go alone to a doctor’s appointment? There are many milestones we overcome as we journey into adulthood, but not all have to be scary or intimidating. When it comes to learning about finances and banking, Greater Nevada has your back.
Much like texting, banking has its own set of acronyms and phrases. It may seem overwhelming at first trying to understand what they all mean, but they are important to learn in order to understand what kind of deal or transaction you’re getting into. The following is a cheat sheet of common banking terms that’ll help you to become financially independent:
or Annual Percentage Yield, reflects the total amount of interest paid on your account based on the interest rate and frequency of compounding in a 365-day year. So the higher the number, the more money your bank or credit union will pay you in an interest bearing account. Because some accounts may compound or calculate interest differently, instead of just looking at interest rates, this is the number you want to compare because all institutions have to calculate APY the same way; a great way to compare apples to apples!
or Annual Percentage Rate, is actually the exact opposite of APY. This is the cost of credit, including fees and interest you pay, on a yearly basis on a loan, line of credit or credit card. So for this one, look for a low number as a good way to save money.
is any day during a 5-day, Monday through Friday, work week that the bank or credit union is open. Even though your bank or credit union may be open on the weekend, that does not make it a business day; and most holidays don’t count as business days either! So keep an ear out when someone tells you that your new debit card may take a few business days to get to you in the mail- it might be longer than you think!
or Certificate of Deposit, is a savings certificate in which the depositor receives interest after setting up a fixed term and rate. Essentially, you would take a portion of your money that you don’t need right away and lock it up for a while. While it’s locked up, you accrue interest and when the term is up (or as we like to say in the biz, “you’ve reached your maturity date”) then you may reclaim your new balance which includes your original money plus the interest you have earned. This is a perfect example of an account that has APY. Since you are promising that your bank or credit union can use your money for a while and that you will leave it there for the entire term, you usually get a higher APY on CDs than you do on a savings account. But be careful. If you pull out your money before it’s matured, then you may encounter a penalty.
has two different meanings in the world of banking, so it’s important to listen to what your banker is saying, and in what context credit is being talked about. We’ll break it down for you:
- A record of how well you’ve paid your bills and loans in the past. The better your credit, the more buying power/borrowing ability you have. When people refer to your “credit score” this is the definition of credit they are talking about.
- Money that is added to your account. For example, when $2 is added to an account, it may be referred to as “crediting” the account.
is taking money from your account. If you had to take $2 out of your account, then the account would be “debited” $2. This is why your bank card is referred to as a debit card; because it takes the money out of your account when you use it.
or OD, happens when you spend more money then what is available in your account, causing it to go negative. Try to avoid this because it can really cost you. Good news though; Greater Nevada has solutions to protect you from overdraft fees
. You might also hear someone say “NSF”. NSF or Non-Sufficient Funds is a term that means pretty much the same thing as OD.
Hopefully this list helps you know a little more about some words in the world of finance and gives you more insight into your options and services here with Greater Nevada. If you still have questions, do not hesitate to contact our resource center
or stop by a branch for more information.