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. 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.
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.
Cashier's Check: A check guaranteed by a bank. Cashier's 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.
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.