In this section
Glossary of Accounts Terms
Automated Teller Machine
(ATM)
Allows individuals to access their deposit accounts at any time to withdraw
cash, make deposits, pay bills or transfer money. Requires a banking
card and a valid Personal Identification Number (PIN). BACK TO TOP
Bankbook
A record-keeping book for deposit accounts in which transactions such
as deposits, withdrawals, bill payments and interest payments are recorded. BACK TO TOP
Bank statement
A statement detailing all transactions made through a deposit account,
usually issued monthly. BACK TO TOP
Cash flow
The movement of cash into, through, and out of a particular entity,
i.e. an individual's deposit account. BACK TO TOP
Cash instruments
Low-risk interest-bearing investments that are highly liquid in nature.
Includes instruments such as deposit accounts, government treasury bills,
bankers' acceptances and commercial paper. BACK TO TOP
Charge account
A credit account extended by a retailer which is subject to specific
interest rates and payment requirements. BACK TO TOP
Cheque
A negotiable bank instrument, payable on demand, that instructs a bank
to pay the indicated amount to the party named on the cheque from funds
held on deposit. BACK TO TOP
Compound interest
Interest earned on both the principal and the interest it has previously
earned. BACK TO TOP
Credit card
A card issued by a financial institution that allows the cardholder
to use credit to purchase goods and services up to a predetermined limit.
Interest rates are traditionally higher than those charged on consumer
loans. BACK TO TOP
Direct deposit
A payment deposited directly into an individual's account. BACK TO TOP
Interest
Payments made by a borrower to an investor for the use of his or her
money. BACK TO TOP
Interest rate
The rate of return a lender receives for permitting a borrower to use
money for a specified term. The interest rate is usually expressed as
an annual percentage. BACK TO TOP
Joint account
A deposit account registered to two or more parties. BACK TO TOP
Line of credit
A type of credit arrangement usually issued by a financial institution
which offers an individual immediate access to a pre-determined amount
of cash upon demand without having to apply for a loan. A line of credit
may be either unsecured or secured with personal assets such as bonds,
term deposits or home equity. A secured line of credit results in lower
risk to the financial institution and a lower rate of interest to the
individual. BACK TO TOP
Loan
An agreement in which money owned by one party is lent to another, in
exchange for which the borrower pays the lender a predetermined rate
of interest. Repayment is usually subject to specific terms and conditions. BACK TO TOP
Overdraft
An amount paid out by a bank to cover cheques and withdrawals that exceed
the balance of funds available in a deposit account. BACK TO TOP
Overdraft protection
A service offered by financial institutions that ensures all cheques
and withdrawals are covered regardless of whether adequate funds are
available in the account. Overdraft protection is negotiated up to a
predetermined amount, and there is a specified minimum charge. Interest
is charged on the overdraft until it is repaid. BACK TO TOP
Overdrawn
The withdrawal of more money than an account actually has on deposit. BACK TO TOP
Personal Identification
Number (PIN)
An alpha-numerical code selected by holders of banking and credit cards
that is required to access accounts through automated banking machines. BACK TO TOP
Post-dated cheque
A cheque dated later than the date on which it was written, and only
cashable at that later date. BACK TO TOP
Posted rate
Publicly announced rate of interest guaranteed by a financial institution
and paid on personal bank accounts and on specific debt instruments
such as term deposits and GICs. BACK TO TOP
Pre-authorized payment
An amount that an individual authorizes to be automatically withdrawn
from his or her deposit account on a regular basis. Mortgage payments,
car or automatic bill payments, or contributions to an RSP are examples. BACK TO TOP
Revolving credit
Typical of a line of credit or credit card in which the amount of available
credit increases and decreases as funds are borrowed and then repaid. BACK TO TOP
Safety deposit box
A personal storage box located in a bank that can be rented on an annual
basis to keep valuables and important papers. BACK TO TOP
Savings account
An interest-bearing account devoted to the accumulation of savings. BACK TO TOP
Service fees or service
charges
Fees charged by a financial institution for account services such as
funds withdrawals, transfers, bill payments, etc. Servitude (see easement) BACK TO TOP
