Money 101

Banking can be confusing! To make it easier, Higher One has compiled this list of common banking terms and definitions along with common terminology associated with Higher One and your OneAccount.

General Banking Terms:

ACH: an abbreviation for Automated Clearing House; an electronic network for financial transactions in the United States. ACH is responsible for processing large volumes of both credit and debit transactions between financial institutions. Its rules and regulations are governed by The Electronic Payments Association and the Federal Reserve.

Electronic payments on utilities, loans, and other types of bills are all examples of ACH debit transactions. Specific to Higher One, a student who opts to have their refund deposited directly into an existing bank account would constitute an ACH.

In accordance with the rules and regulations governing ACH, no financial institution may simply issue an ACH transaction (whether it be debit or credit) towards an account without prior authorization from the account holder known as the Receiver.

Automated Teller Machine (ATM): A machine that allows the customer to get cash withdrawals, check balances and transfer funds. ATMs are generally accessible 24 hours a day, 7 days a week.

Bank Routing Number: Your bank's unique identification number. Also known as a "routing transit number" or RTN. Your routing number is the nine numbers preceding your account number at the bottom left of your check.

Check: A negotiable instrument instructing a financial institution to pay a specific amount of currency from an account.

Bank Statement: A record of all transactions and debit/credit entries in the form of cash, check, or transfer.

Cashiers Check: A check guaranteed by a bank. Cashiers checks are usually treated like cash since most banks clear them instantly.

Credit Card: A plastic card that can be used by the holder to make purchases or obtain cash advances using a line of credit from the card-issuing financial institution.

Debit Card: A plastic card designed to allow a customer access to funds in his/her checking account to purchase goods, obtain cash, or transfer funds from one account to another. Debit cards are accepted wherever you see the Visa or MasterCard logo.

Direct Deposit: A pre-authorized payment automatically deposited to a customer's checking account.

EFT (Electronic Funds Transfer): The computer-based systems used to perform financial transactions electronically. The term EFT is used to describe a number of different concepts including:

  • Cardholder initiated transactions in which a cardholder makes use of a credit or debit card.
  • Electronic payments by businesses.
  • Electronic check clearing.

FDIC-Insured: Federally insured deposits protected by the Federal Deposit Insurance Corporation (FDIC) for up to $100,000 per person.

Fee Schedule: List of fees charged for various banking services including: wire transfers, overdrafts and foreign ATM activity.

Insufficient Funds: Account status when the accountholder's available balance is lower than an amount being debited against the account.

Overdraft: When withdrawals from a bank account exceed the available balance, giving the account a negative balance.

Personal Identification Number (PIN): A code used by the account holder to authorize a transaction or obtain information regarding his or her account.

Stop Payment: A customer's legal right to give instruction to the bank for stopping payment of a check before it has been presented for payment. A fee may be charged for this service.

Uncollected Funds: Funds deposited or cashed against an account with a check that has not yet cleared. Financial Institutions typically place a temporary hold on customers' uncollected funds, making those funds unavailable for withdrawal until the time period of the hold expires.

Wire Transfer: The electronic transfer of funds from one financial institution to another.

Higher One Specific Terms:

Add Money: The transferring of funds from an outside bank account to your OneAccount.

Available Balance: The amount of funds available minus any amount on hold. This includes all activity-deposits, credits, withdrawals or debits. Note: A temporary hold is placed on your account almost immediately to prevent overdrafts.

Example: The beginning balance on your OneAccount is $2000. After purchasing two computer monitors online for $500, your available balance is now $1500.

Automatic Bill Pay: An electronic payment scheduled by the cardholder with a service provider or merchant (also known as the "Payee") that accepts Debit MasterCard®.

CIP (customer identification program): Verification process that must be completed after an account is created. Federal banking regulations require all financial institutions to obtain, verify and record the identity of their account holders. Higher One complies with this federal directive by requesting a legible copy of any government issued identification. Note: In all cases, Higher One pledges the protection and confidentiality of your personal information.

EasyHelpSM: OneAccount online help available through Higher One 24 hours a day, 7 days a week.

Easy RefundSM: Any refund owed to you from your school deposited directly into the OneAccount (Higher One checking account). Easy Refund is the fastest refund option, with funds available the same day they are released from the school.

Funding Account: The bank account used to add money or "fund' your OneAccount. The funding account is directly linked to your OneAccount.

OneAccount: The checking account linked to your Higher One Debit MasterCard® (actual card name is specific to the school you attend). The OneAccount offers free checking with no minimum balance or monthly fees.

Online Bill Pay: The ability for an account holder to pay bills online. Note: This feature is set up through your OneAccount.

Payee/Payer: Payee-the party at the receiving end of a payment. Payer-the individual or entity making the payment.

Pending Transaction: Once your card is swiped at a merchant's card terminal, the transaction total is "held" for three (3) business days, allowing the merchant enough time to debit your OneAccount.

Refund Preference: The selection of how you'd like to receive any refund owed to you from your school.

Send Money: The transferring of funds from your OneAccount or outside bank account to another OneAccount.

Sign for it: Phrases used to promote signature based transactions with the OneAccount. When using your card for purchases, you can authorize a purchase by using your PIN or by signing the receipt. Note: signing the receipt means you may be better protected. Higher One offers you peace of mind by providing the MasterCard® Zero Liability policy when you make signature based purchases with your Debit MasterCard. Zero Liability means you are eligible for protection against fraudulent purchases made with your card. Be sure to always safeguard your card and report a card theft promptly. Learn more about terms and details of the Zero Liability policy provided by Higher One.

Opening and using your own checking account is fundamental in learning how to manage your money. And, it's really easy to do once you know the basics.

Basic training: What is a checking account?

A checking account, or demand account is an account held at a bank or other financial institution for the purpose of securely and quickly providing access to funds "on demand." Money in a checking account is insured up to 100 thousand dollars through the FDIC. Money can be easily withdrawn by writing checks, using a debit card, or visiting an ATM.

What are the Rules?

  • You must have enough money in your checking account to cover purchases made with a check or debit card. Spending more than you have available in your checking account will result in an "overdraft fee."
  • Check your statements regularly to ensure that all the transactions and your balance is correct.
  • Deposit checks right away-most checks cannot be cashed after three months.
  • Stick to your financial institution's ATMs. Using other ATMs may be convenient, but are often expensive due to the extra fees they carry.
  • Keep accurate records of all the checks you have written and debit card purchases made. Make sure you sign for all debit card purchases and keep every receipt.

How to Write a Check

Here's a sample check with an explanation of each field.

  • Date - Write in the date of the check in standard month/day/year format, or write it out, "July 15, 2007."
  • Pay to the order of. - Fill in the name of the person or organization (payee). In this case, "Barb's Flower Barn."
  • Dollar Amount. - Write the full amount in standard dollars and cents format in the Dollar Box to the right of the payee.
  • Amount ($). - Write the full amount of the check out in long hand and draw a line to fill in space if needed. This line keeps anyone from altering the amount of your check. Writing the amount helps to verify the amount in the dollar box and vice-versa.
  • Signature. - Sign your name! This shows you approve the amount on the check to be paid.
  • Memo. - Write the purpose of the check, such as "July rent" or "June cell phone."

Here's a sample check register:

Check #: Track the check numbers in this column.

Date: The date of the transaction or the date the check was written.

Description: A brief description of the transaction is recorded here.

Amount: The amount of the debit (money out) to the account goes here.

Deposit: The amount of any deposit (money in) is in this column.

Balance: The current available account balance, adjusted for any debits or deposits, is logged here.

Best practices for writing checks

Make sure your signature is the last thing you fill out on any check. If you lose a check that's already signed, anyone can fill in your name and cash it. Never make a check out to "Cash," this allows anyone to cash it if it's lost or stolen. Instead, always name a specific person or business on the pay to the order of section of the check.

  • If your checks are lost or stolen, report it immediately to your financial institution and the police.
  • Record all the checks you write in your checkbook register.
  • When filling out a check always use a pen.
  • Fill in every word and number of the check, leaving no room for anyone to write in something else. This will prevent someone from adding numbers to make the check a larger amount or altering the payee's name.
  • If you need to correct a mistake on a check, tear it up and start a new one instead of crossing out errors or writing over numbers. Remember to enter it as "void" in your checkbook register.

By: Blythe Terrell

For many students, college is the first major landmark on the path to independence. Moving away from home means no more curfews, no asking for permission and no parents looking over their shoulders. It also means that the liberty-seeking college kid is now free to make his or her own mistakes.

In such an environment, money management often becomes an issue. Knowing how to avoid these problems is the key to beating them. Here are ten common mistakes students make, and how you can avoid them.

  • Making poor choices about credit cards. Credit card companies set up booths on college campuses, offering T-shirts and other items to anyone who will sign up for a card. Although the deals can seem fantastic, students must look into the card's repayment terms carefully. "When students get credit cards, two things can happen," said Stephen Ferris, professor of finance at the University of Missouri - Columbia. "One, they don't read the fine print and see what they're paying. And they're paying a lot. Or they use it until it's maxed out." It is absolutely necessary to pay your credit cards on time each month, added Ferris.
  • Letting friends pressure them into spending money. College life is full of opportunities to spend money, finals week smorgasbord, an evening out with friends, road trips and vacations...Not knowing how to say "no" can cause students to spend money they just do not have. "If you can't afford it, just say no", says David Fingerhut, a financial adviser with Pines Financial in St. Louis.
  • Not setting up a budget. If they have a set amount of money, they must plan ahead and know how much they can spend each month. "It has to work on paper before it works in real life," Fingerhut said.
  • Not seeking out the best bank rates. Banks offer many different kinds of checking and savings accounts, but some charge fees that others do not. It is essential for students to do research and not simply go with the closest, most accessible bank, Ferris said.
  • Overpaying for schooling. When choosing a school, students need to determine whether the more expensive school is worth the price. Students who graduate in debt tend to be poor savers, said John Baker, a financial planning consultant in St. Louis.
  • Not keeping track of bank account balances. Balancing a checkbook may be tedious work, but it beats bouncing checks and getting into trouble with the bank. Many banks charge a fee for each bounced check, which makes it even more difficult for the student to get out of the red.
  • Lending money to friends. Fingerhut's advice here is simple: do not lend to friends, or you will not have friends. The counselor believes that giving someone a loan will not fix that person's inability to manage finances and if they don't pay you back then the friendship could get very strained. He has met scores of clients who borrowed money from friends or relatives and then later faced problems paying back those loans.
  • Failing to research product pricing before making purchases. Students must learn how to comparison-shop and economize. Daily items like toothpaste may be available elsewhere at lower prices than students realize. "Students have knowledge about things like cars, stereos and DVDs," Ferris said. "They don't take time to investigate other products."
  • Not planning for the future. While retirement may seem ages away, it is important for students to plan ahead. Money invested in retirement funds will grow with interest, and getting started early will pay off in your later years, Ferris said.
  • Not having a job, even when they have time to do so. College can keep students very busy, but there are many opportunities for work both on campus and off. Not only can students earn extra money, having a job will also help them prepare for life after college.