Banking Terms - 1

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Banking Terms

1. Account Agreement:
 The contract governing your open-end credit account, it provides information on changes that may occur to the account.

2. Account History:
 The payment history of an account over a specific period of time, including the number of times the account was past due or over limit.

3. Account Holder:
 Any and all persons designated and authorized to transact business on behalf of an account. Each account holder's signature needs to be on file with the bank. The signature authorizes that person to conduct business on behalf of the account.

4. Acquiring Bank:
 In a merger, the bank that absorbs the bank acquired.

5. Accrued interest:
 Interest due from issue date or from the last coupon payment date to the settlement date. Accrued interest on bonds must be added to their purchase price.

6. Adjustable-Rate Mortgages (ARMS):
 Also known as variable-rate mortgages. The initial interest rate is usually below that of conventional fixed-rate loans. The interest rate may change over the life of the 
loan as market conditions change. There is typically a maximum (or ceiling) and a minimum (or floor) 
defined in the loan agreement. If interest rates rise, so does the loan payment. If interest rates fall, the 
loan payment may as well.

7. Arbitrage: 
Buying a financial instrument in one market in order to sell the same instrument at a higher price in another market.

8. Adverse Action: 
Under the Equal Credit Opportunity Act, a creditor's refusal to grant credit on the terms requested, termination of an existing account, or an unfavorable change in an existing account.

9. Adverse Action Notice:
 The notice required by the Equal Credit Opportunity Act advising a credit applicant or existing debtor of the denial of their request for credit or advising of a change in terms 
considered unfavorable to the account holder.

10. AER: 
Annual earnings rate on an investment.

11. Affidavit:
 A sworn statement in writing before a proper official, such as a notary public.

12. Alteration: 
Any change involving an erasure or rewriting in the date, amount, or payee of a check or
other negotiable instrument.

13. Amortization:
 The process of reducing debt through regular installment payments of principal and 
interest that will result in the payoff of a loan at its maturity.

14. Anytime Banking:
 With introduction of ATMs, Tele-Banking and internet banking, customers can conduct their business anytime of the day and night. The 'Banking Hours' is not a constraint for 
transacting banking business.

15. Anywhere Banking : 
Refers to banking not only by ATMs, Tele-Banking and internet banking, but also to core banking solutions brought in by banks where customer can deposit his money, cheques and also withdraw money from any branch connected with the system. All major banks in India have 
brought in core banking in their operations to make banking truly anywhere banking.

16. Annual Percentage Rate (APR): 
The cost of credit on a yearly basis, expressed as a percentage.

17. Annual Percentage Yield (APY):
 A percentage rate reflecting the total amount of interest paid on a deposit account based on the interest rate and the frequency of compounding for a 365-day year.

18. Annuity : 
A life insurance product which pays income over the course of a set period. Deferred annuities allow assets to grow before the income is received and immediate annuities (usually taken from a year after purchase) allow payments to start from about a year after purchase.

19. APR: 
The annual percentage rate of interest, usually on a loan or mortgage, usually displayed in brackets and representing the true cost of the loan or mortgage as it shows any additional payments beyond the interest rate.

20. Application:
 Under the Equal Credit Opportunity Act (ECOA), an oral or written request for an extension of credit that is made in accordance with the procedures established by a creditor for the type of credit requested.