The Encyclopedic Dictionary of International Finance and Banking is written and professionals, rather than as a reference guide for laymen or a glossary of. To help you better understand the terms used in the financial investorwords. com and echecs16.info were used to clarify definitions. Read Dictionary of Banking Terms PDF Barron's Business Dictionaries Ebook by Thomas P. echecs16.infohed by Barrons Educational Series.
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[PDF] Dictionary of Banking Terms (Barron s Business Dictionaries) (Barron s Dictionary of Banking Terms) Download by - Thomas P. Fitch. [PDF] Reminiscences of a Stock Operator (Wiley Investment Classics) Download [PDF] The House of Morgan: An American Banking Dynasty and the. Complete List of Banking Terms with Definitions For Bank Exams Powered by echecs16.info your A to Z competitive exam guide ww w. Gr 8A mb iti on. Glossary of Banking Terms and Definitions: Banking Terms that Begin With A. Banking Terms. Banking Definitions. AAA. AAA is a term or a grade that is used to .
Net assets are assets in excess of liabilities. Liquid assets are assets either in the form of cash or readily convertible into cash. Balanced Trust- Balanced Trusts invest in the broadest spectrum of investment markets, including shares, listed property trusts and government securities. The main advantage in making this type of investment lies in the flexibility afforded to their fund managers in being able to alter the investment composition of the trust in the light of changing economic and investment conditions to pursue the best results. Capital Growth- The increase in value of an asset or investment i. Cash trusts operate with a trust deed, a trustee overseeing activities and a management company responsible for the investment strategy.
Banking Day: A business day during which an office of a bank is open to the public for substantially all of its banking functions. See also Banking Day. Bankrupt: A bankrupt person, firm, or corporation has insufficient assets to cover their debts. The debtor seeks relief through a court proceeding to work out a payment schedule or erase debts. In some cases, the debtor must surrender control of all assets to a court-appointed trustee.
Bankruptcy: The legal proceedings by which the affairs of a bankrupt person are turned over to a trustee or receiver for administration under the bankruptcy laws. There are two types of bankruptcy: Involuntary bankruptcy-one or more creditors of an insolvent debtor file a petition having the debtor declared bankrupt. Voluntary bankruptcy-the debtor files a petition claiming inability to meet financial obligations and willingness to be declared bankrupt.
Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract.
See also Beneficiary. Billing Cycle: The time interval between the dates on which regular periodic statements are issued. Billing Date: The month, date, and year when a periodic or monthly statement is generated. Calculations have been performed for appropriate finance charges, minimum payment due, and new balance. Billing Error: A charge that appears on a periodic statement associated with an extension of credit e.
A billing error can also be caused by a creditor's failure to credit a payment or other credit to an account as well as accounting and clerical errors. See also Credit Card Disputes. Bond, U. Savings: Savings bonds are issued in face value denominations by the U. They are typically long-term, low-risk investment tools. See also Savings Bonds. Business Day: Any day on which offices of a bank are open to the public for carrying on substantially all of the bank's business.
See also Credit Card Business Day. C Canceled Check : A check that a bank has paid, charged to the account holder's account, and then endorsed. Once canceled, a check is no longer negotiable. Cashier's Check: A check drawn on the funds of the bank, not against the funds in a depositor's account. However, the depositor paid for the cashier's check with funds from their account. The primary benefit of a cashier's check is that the recipient of the check is assured that the funds are available.
See also Cashier's Checks.
Cease and Desist Letter: A letter requesting that a company stops the activity mentioned in the letter. Certificate of Deposit: A negotiable instrument issued by a bank in exchange for funds, usually bearing interest, deposited with the bank. See also Certificates of Deposit. Certificate of Release: A certificate signed by a lender indicating that a mortgage has been fully paid and all debts satisfied, also known as release of lien.
See also Release of Lien. Certified Check: A personal check drawn by an individual that is certified guaranteed to be good. The face of the check bears the words "certified" or "accepted," and is signed by an official of the bank or thrift institution issuing the check.
The signature signifies that the signature of the drawer is genuine, and sufficient funds are on deposit and earmarked for payment of the check.
Charge-off: The balance on a credit obligation that a lender no longer expects to be repaid and writes off as a bad debt. See also Charge Off.
Check: A written order instructing a financial institution to pay immediately on demand a specified amount of money from the check writer's account to the person named on the check or, if a specific person is not named, to whoever bears the check to the institution for payment.
Check 21 Act: Check 21 is a Federal law that is designed to enable banks to handle more checks electronically, which is intended to make check processing faster and more efficient. Check 21 is the short name for the Check Clearing for the 21st Century Act, which went into effect on October 28, See also Check Check Truncation: The conversion of data on a check into an electronic image after a check enters the processing system.
Check truncation eliminates the need to return canceled checks to customers. Checking Account: A demand deposit account subject to withdrawal of funds by check. ChexSystems shares this information among member institutions to help them assess the risk of opening new accounts.
ChexSystems only shares information with the member institutions; it does not decide on new account openings. Generally, information remains on ChexSystems for five years. See also ChexSystems. Closed-End Credit : Generally, any credit sale agreement in which the amount advanced, plus any finance charges, is expected to be repaid in full by a specified date.
Most real estate and automobile loans are closed-end agreements. See also Closed-end Credit. Closed-End Loan: Generally, any loan in which the amount advanced, plus any finance charges, is expected to be repaid in full by a specified date.
See also Consumer Loans and Mortgages. Closing a Mortgage Loan: The consummation of a contractual real estate transaction in which all appropriate documents are signed and the proceeds of the mortgage loan are then disbursed by the lender. Closing Costs: The expenses incurred by sellers and downloaders in transferring ownership in real property. The costs of closing may include the origination fee, discount points, attorneys' fees, loan fees, title search and insurance, survey charge, recordation fees, and the credit report charge.
Collateral: Assets that are offered to secure a loan or other credit. For example, if you get a real estate mortgage, the bank's collateral is typically your house. Collateral becomes subject to seizure on default. See also Insurance and Mortgages. Collected Funds: Cash deposits or checks that have been presented for payment and for which payment has been received. See also Collected Funds. Collection Agency: A company hired by a creditor to collect a debt that is owed. Creditors typically hire a collection agency only after they have made efforts to collect the debt themselves, usually through letters and telephone calls.
The alert requires any creditor that is asked to extend credit to contact the consumer by phone and verify that the credit application was not made by an identity thief.
See also Fraud Alert and Identification. A Federal law that mandates that all the records created and kept by Federal agencies in the executive branch of government must be open for public inspection and copying. The only exceptions are those records that fall into one of nine exempted categories listed in the statute.
An account on which funds may not be withdrawn until a lien is satisfied and a court order or other legal process makes the account available for withdrawal e.
An account may also be frozen when there is a dispute regarding the true ownership of an account. The bank will freeze the account to preserve the existing funds until legal action can determine the lawful owner.
An entity that provides information about a consumer to a consumer reporting agency for inclusion in a consumer report. A legal process that allows a creditor to remove funds from your bank account to satisfy a debt that you have not paid. If you owe money to a person or company, they can obtain a court order directing your bank to take money out of your account to pay off your debt.
An extension of credit from a financial institution that is guaranteed by a Federal or State government entity to assist with tuition and other educational expenses. The government entity is responsible for paying the interest on the loan and paying the lender to manage it. The government entity also is responsible for the loan if the student defaults.
A party who agrees to be responsible for the payment of another party's debts should that party default. Used to indicate that a certain amount of a customer's balance may not be withdrawn until an item has been collected, or until a specific check or debit is posted. A line of credit secured by the equity in a consumer's home. It can be used for home improvements, debt consolidation, and other major downloads.
Interest paid on the loan is generally tax deductible consult a tax advisor to be sure. The funds may be accessed by writing checks against the line of credit or by getting a cash advance. See also Home Equity Products. A home equity loan allows you to tap into your home's built-up equity, which is the difference between the amount that your home could be sold for and the amount that you still owe.
Homeowners often use a home-equity loan for home improvements, to pay for a new car, or to finance their child's college education. The interest paid is usually tax-deductible. Because the loan is secured by your home's equity, if you default, the bank may foreclose on your house and take ownership of it.
This type of loan is sometimes referred to as a second mortgage or borrowing against your home. An account that has little or no activity; neither deposits nor withdrawals having been posted to the account for a significant period of time. An index-linked CD is a deposit obligation of the issuing bank and is often sold through bank branches and affiliated and unaffiliated brokers. Index-linked CDs provide the investor the ability to participate in the appreciation, if any, of a particular index, during the term of the CD.
Index-linked CDs may have complicated payout structures and may not be suitable or appropriate for all investors. Investors should carefully review the investment risk considerations detailed in the relevant offering documents and disclosure statements. Index-linked CDs are not securities and are not registered under securities laws. See also Index-linked Certificates of Deposit.
An account in the name of one individual. See also Individual Account Identification. A retirement savings program for individuals to which yearly tax-deductible contributions up to a specified limit can be made. The amount contributed is not taxed until withdrawn. When a depositor's checking account balance is inadequate to pay a check presented for payment. See also Overdrafts.
Insurance to protect the homeowner and the lender against physical damage to a property from sources such as but not limited to fire, wind, or vandalism. See also Property Insurance. The term interest is used to describe the cost of using money, a right, share, or title in property. The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time.
Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. IA table of yields or interest rates being paid on debt that is used to determine interest-rate changes for adjustable-rate mortgages and other variable-rate loans.
See also Index-Linked CD. An account owned by two or more persons. Either party can conduct transactions separately or together as set forth in the deposit account contract. See also Joint Account Liability. Writing a check in an amount that will overdraw the account but making up the deficiency by depositing another check on another bank.
For example, mailing a check for the mortgage when your checking account has insufficient funds to cover the check, but counting on receiving and depositing your paycheck before the mortgage company presents the check for payment. The fee charged for delinquent payment on an installment loan, usually expressed as a percentage of the loan balance or payment.
Also, a penalty imposed by a card issuer against a cardholder's account for failing to make minimum payments. A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment e. See also Leases. An individual or financial institution that lends money with the expectation that the money will be returned with interest. Legal claim against a property. Once the property is sold, the lien holder is then paid the amount that is owed.
A pre-approved loan authorization with a specific borrowing limit based on creditworthiness. A line of credit allows borrowers to obtain a number of loans without re-applying each time as long as the total of borrowed funds does not exceed the credit limit. The ratio of the loan principal amount borrowed to the appraised value selling price. The LTV will affect programs available to the borrower; generally, the lower the LTV, the more favorable the program terms offered by lenders.
The written agreement between a borrower and a lender in which the terms and conditions of the loan are set. A contractual agreement in a loan that allows the borrower or lender to permanently change one or more of the terms of the original contract. See also on Mortgage Assistance. The net amount of funds that a lending institution disburses under the terms of a loan, and which the borrower then owes. A check payable by, at, or through a bank in the same check processing region as the location of the branch of the depository bank.
The depository bank is the bank into which the check was deposited. As of February 27, , the Federal Reserve consolidated its checking processing centers into one processing center. Therefore, all checks are now considered local.
A structure, built on a permanent chassis, transported to a site in one or more sections, and affixed to a permanent foundation. The term does not include recreational vehicles. The date on which the principal balance of a loan, bond, or other financial instrument becomes due and payable. The amount of money required to be on deposit in an account to qualify the depositor for special services or to waive a service charge. See also Minimum Balance.
The minimum dollar amount that must be paid each month on a loan, line of credit, or other debt. See also Minimum Payment. A payment that has been made but not credited to the appropriate account.
A savings account that offers a higher rate of interest in exchange for larger than normal deposits. Insured by the FDIC, these accounts have limits on the number of transactions allowed and may require higher balances to receive the higher rate of interest. An open-ended mutual fund that invests in short-term debts and monetary instruments such as Treasury bills and pays money market rates of interest.
Money market funds usually offer checkwriting privileges. They are not insured by the FDIC. A debt instrument used in a real estate transaction where the property is the collateral for the loan. A mortgage gives the lender a right to take possession of the property if the borrower fails to pay off the loan. See also Mortgage. A loan made by a lender to a borrower for the financing of real property.
The lender in a mortgage loan relationship. A fund operated by an investment company that raises money from shareholders and invests it in stocks, bonds, options, commodities, or money market securities.
These funds offer investors the advantages of diversification and professional management. To participate, the investor may pay fees and expenses. Mutual funds are not covered by FDIC insurance. A bank that is subject to the supervision of the Comptroller of the Currency. The Office of the Comptroller of the Currency is a bureau of the U. Treasury Department. A national bank can be recognized because it must have "national" or "national association" in its name.
An employee of the Comptroller of the Currency whose function is to examine federally chartered financial institutions. Examiners evaluate bank activities and management processes to ensure national banks operate in a safe and sound manner and comply with laws and regulations. The Federal regulatory agency that charters and supervises Federal credit unions.
A savings account from which withdrawals can be made by negotiable orders of withdrawal functional equivalent of checks. See also NOW Account. There are several types of Federal benefits that are not automatically protected under 31CFR Federal benefits received by check rather than direct deposit; Federal benefits received more than two months before the bank received the garnishment order or Federal benefits that were transferred to another bank account.
The benefits may be exempt from garnishment but you will have to alert the court or creditor. A check drawn on a bank and signed by an authorized bank official. Also known as a cashier's check. Banks' legal right to seize funds that a guarantor or debtor may have on deposit to cover a loan in default. A service that allows an account holder to obtain account information and manage certain banking transactions through a personal computer via the financial institution's web site on the Internet.
This is also known as Internet or electronic banking. A credit agreement typically a credit card that allows a customer to borrow against a preapproved credit line when downloading goods and services. The borrower is only billed for the amount that is actually borrowed plus any interest due.
Also called a charge account or revolving credit. National banks conduct some of their banking activities through companies called operating subsidiaries. These subsidiaries are companies that are owned or controlled by a national bank and that, among other things, offer banking products and services such as loans, mortgages, and leases.
The Office of the Comptroller of the Currency supervises and regulates the activities of many of these operating subsidiaries. A check written by a depositor that has not yet been presented for payment to or paid by the depositor's bank. When the amount of money withdrawn from a bank account is greater than the amount actually available in the account, the excess is known as an overdraft, and the account is said to be overdrawn.
An open-end credit account in which the assigned dollar limit has been exceeded. See also Overlimit. See also Participating Community. A book in ledger form in which are recorded all deposits, withdrawals, and earnings of a customer's savings account. See also Passbook. A small-dollar, short-term loan that a borrower promises to repay out of their next paycheck or deposit of funds. The person or organization to whom a check, draft, or note is made payable.
See also Checks: Endorsing Checks. A bank upon which a check is drawn and that pays a check or other draft. See also Paying Bank and Funds Availability. The date on which a loan or installment payment is due. It is set by a financial institution. Any payment received after this date is considered late; fees and penalties can be assessed. See also Payment Due Date.
The complete repayment of a loan, including principal, interest, and any other amounts due. Payoff occurs either over the full term of the loan or through prepayments. A formal statement prepared when a loan payoff is contemplated. It shows the current status of the loan account, all sums due, and the daily rate of interest. The interest rate described in relation to a specific amount of time.
The monthly periodic rate, for example, is the cost of credit per month; the daily periodic rate is the cost of credit per day. The billing summary produced and mailed at specified intervals, usually monthly. Generally a four-character number or word, the PIN is the secret code given to credit or debit cardholders enabling them to access their accounts.
The code is either randomly assigned by the bank or selected by the customer. It is intended to prevent unauthorized use of the card while accessing a financial service terminal.
The activity of defrauding an online account holder of financial information by posing as a legitimate entity.
See also Internet Scams. Common acronym for principal, interest, taxes, and insurance—used when describing the monthly charges on a mortgage. See also Point of Sale. A written instrument which authorizes one person to act as another's agent or attorney. The power of attorney may be for a definite, specific act, or it may be general in nature. The terms of the written power of attorney may specify when it will expire. If not, the power of attorney usually expires when the person granting it dies.
Some institutions require that you use the bank's power of attorney forms. The bank may refer to this as a Durable Power of Attorney: The principal grants specific rights to the agent. See also Power of Attorney. An EFT authorized in advance to recur at substantially regular intervals. A system established by a written agreement under which a financial institution is authorized by the customer to debit the customer's account in order to pay bills or make loan payments.
See also Preauthorized Payment. See also Preferred Risk Policy. The payment of a debt before it actually becomes due. See also Prepayment. A clause in a mortgage allowing the mortgagor to pay off part or all of the unpaid debt before it becomes due. A penalty imposed on a borrower for repaying the loan before its due date. In the case of a mortgage, this applies when there is not a prepayment clause in the mortgage note to offset the penalty. See also Prepayment Penalty.
The cardholder's account balance as of the previous billing statement. See also Previous Balance. The outstanding balance on a loan, excluding interest and fees.
See also Principal Balance. Insurance offered by a private insurance company that protects the bank against loss on a defaulted mortgage up to the limit of the policy usually 20 to 25 percent of the loan amount. The borrower pays the premium. See also Private Mortgage Insurance.
Federal law that, among other things, requires lenders to provide "good faith" estimates of settlement costs and make other disclosures regarding the mortgage loan. RESPA also limits the amount of funds held in escrow for real estate taxes and insurance. The process of analyzing two related records and, if differences exist between them, finding the cause and bringing the two records into agreement.
Comparing an up-to-date check book with a monthly statement from the financial institution holding the account. The alleged practice of certain lending institutions of not making mortgage, home improvement, and small business loans in certain neighborhoods-usually areas that are deteriorating or considered by the lender to be poor investments. A way of obtaining a better interest rate, lower monthly payments, or borrow cash on the equity in a property that has built up on a loan.
A second loan is taken out to pay off the first, higher-rate loan. See also Refinancing. An amount paid back because of an overpayment or because of the return of an item previously sold. See also Refund. See also Regular Program Community. To free a piece of real estate from a mortgage. A form of extending an unpaid loan in which the borrower's remaining unpaid loan balance is carried over renewed into a new loan at the beginning of the next financing period.
See also Renewal. Interest that continues to accrue on your credit card balance from the statement cycle date until the bank receives your payment. For example, if your statement cycle date was January 10 and the bank received your payment on January 20, there were ten days for which interest accrued. This amount will be posted on your next statement.
See also Residual Interest. A negotiable instrument—principally a check—that has been sent to one bank for collection and payment and is returned unpaid by the sending bank. A reverse mortgage is a special home loan product that allows a homeowner aged 62 or older the ability to access the equity that has accumulated in their home. The home itself will be the source of repayment.
The loan is underwritten based on the value of the collateral home and the life expectancy of the borrower. The loan must be repaid when you die, sell your home, or no longer live there as your principal residence.
See also Reverse Mortgages. Also called a charge account or open-end credit. It is also known as the right of set-off. See also Right of Offset.
Right to cancel, within three business days, a contract that uses the home of a person as collateral, except in the case of a first mortgage loan. There is no fee to the borrower, who receives a full refund of all fees paid. A type of safe usually located in groups inside a bank vault and rented to customers for their use in storing valuable items.
See also Safe or Safety Deposit Box. A service provided by banks where securities and valuables are protected in the vaults of the bank for customers. See also Safekeeping and State Safekeeping. A charge assessed by a depository institution for processing transactions and maintaining accounts. See also Service Charge.
A card signed by each depositor and customer of a bank which may be used as a means of identification. The signature card represents a contract between the bank and the depositor. An area defined on a Flood Insurance Rate Map with an associated risk of flooding. Presented to the paying bank days 6 months or more after the original issue date.
Banks are not required by the Uniform Commercial Code to honor stale-dated checks and can return them to the issuing bank unpaid. The maker of a check can discourage late presentment by writing the words "not good after X days" on the back of the check. A bank that is organized under the laws of a State and chartered by that State to conduct the business of banking. A summary of all transactions that occurred over the preceding month and could be associated with a deposit account or a credit card account.
An order not to pay a check that has been issued but not yet cashed. If requested soon enough, the check will not be debited from the payer's account. Most banks charge a fee for this service.
See also Stop Payment Orders. Loans made, insured, or guaranteed under any program authorized by the Higher Education Act. Loan funds are used by the borrower for education purposes. A substitute check is a paper copy of the front and back of the original check. A substitute check is slightly larger than a standard personal check so that it can contain a picture of your original check. A substitute check is legally the same as the original check if it accurately represents the information on the original check and includes the following statement: You can use it the same way you would use the original check.
Substitute checks were created under Check 21, the Check Clearing for the 21st Century Act, which became effective on October 28, See also Substitute Check and Check The period of time and the interest rate arranged between creditor and debtor to repay a loan.
See also Terms. A time deposit also known as a term deposit is a money deposit at a bank that cannot be withdrawn for a certain "term" or period of time. When the term is over it can be withdrawn, or it can be held for another term. The longer the term, the better the yield on the money. Generally, there are significant penalties for early withdrawal.
Assumable As applied to mortgage loans, assumable means that a borrower who sells his or her home may transfer the outstanding mortgage loan secured by that dwelling to the new downloaders.
The new downloaders are said to assume the loan. Assumed name Name used by a proprietorship, partnership, or corporation to conduct business that is different from the legal name of the proprietorship, partnership or corporation. Asymmetric behavior Unbalanced behavior exhibited by financial instruments, the rates or values of which do not change in proportion to changes in market rates. For example, increases in the prime rate quickly reflect most or all of increases in prevailing interest rates, while decreases in the prime rate are slow to reflect decreases in prevailing interest rates.
At the money The situation in which the current market price, the spot price, of an underlying instrument is equal to the strike or exercise price of an option to download or sell that instrument.
Creditors must comply with this procedure in order to obtain a security interest in property owned by a debtor. Alternatively or in addition, the process may be used to give the creditor a security interest in property owned by a guarantor or by another third party. Often, attachment alone is not sufficient to establish the priority of the creditor's interest relative to the interests of other creditors. See financing statements and perfection. Attorney's certificate of title See title opinion.
Attrition analysis Evaluation of the reduction in the amount of an asset or liability held. For example, an analysis of the reduction in savings account balances caused by withdrawals over time.
Audited statements The most reliable type of financial statements. The audit is based on information submitted by the client, and the CPA does not verify all of the information.
Limits on the scope of the audit and on the CPA's responsibility are described in the opinion letter that accompanies the audited statements. However, the value of an audited statement is that the independent CPA is responsible for testing and verifying any numbers that seem questionable or unusual as well as the most material financial information.
For example, if a firm has a material amount of accounts receivable, the auditor will typically confirm at least a sample of those accounts.
If a firm has a material amount of inventory, the auditor will typically perform a physical verification of that inventory. Authenticated security agreement A electronic security agreement between the debtor and the bank that is accepted by the borrower either by downloading the agreement into a personal database or by printing a copy. As an alternative to a security agreement physically signed by the debtor, the amendments to the UCC provide for an authenticated security agreement.
Authority A government or public agency created to perform a single function or a restricted group of related activities. Usually, such units are financed from service charges, fees, and tolls, but in some instances they also have taxing powers. An authority may be completely independent of or partially dependent upon other governments for its financing or the exercise of certain powers.
Automated clearinghouse ACH The ACH network is a nationwide electronic funds transfer system for participating depository financial institutions. The ACH network serves 20, financial institutions, 3 million businesses, and million individuals. The ACH Network is commonly used for direct deposit of payroll and government benefits such as Social Security, direct payment of consumer bills, business-to-business payments, federal tax payments, and, increasingly, e-commerce payments.
In there were 6. Automatic stay An injunction that automatically becomes effective upon the filing of any bankruptcy proceeding. The stay precludes creditors from taking action against the debtor or the debtor's property. In Chapter 12 or 13 bankruptcy proceedings, the automatic stay also applies to co-obligors and guarantors.
Availability The condition in which deposited funds are available for use by the depositor.