Common terms & definitions

ATM
The Automated Teller Machine is a computer operated machine connected to your bank that you can use to make deposits or withdrawals from when your bank branch is closed.

Bank
A bank is an organization that is in the business of borrowing and lending money. A bank makes its money by offering different types of loans such as: car, housing or business loans which you have to pay back with interest.

BACS
The Banks Automated Clearing System is a way of electronically transferring funds from an account at one bank to an account at another bank.

Bonds
Bonds are a form of investment that is either sold by a company or the government. The purchaser of the bond is called the bond holder who gets a certain fixed rate of interest and is entitled to get back the loan at maturity.

Cheque
A cheque is a piece of paper that is basically a written order to a bank to pay a sum of money either to the person whose name is written on the cheque or the bearer of the cheque. Though it is a relatively safe and convenient way of making payments, it typically takes up to five days for a check to be cleared.

Coin
A coin is generally a piece of hard material, traditionally metal and usually in the shape of a disc, which is used as a form of money. Along with bank notes, coins make up the cash forms of all modern money systems. Coins are used for lower-valued units, and bank notes are used for the higher values. Coins were one of the first forms of money.

Currency
A currency is a unit of exchange to facilitate the transfer of goods and services. It is a form of money. Different countries use different currencies such as the British Pound or the U.S. Dollar. However, several countries can use the same name, each for their own currency (such as Canadian dollars and US dollars), several countries can use the same currency (such as the Euro), or a country can declare the currency of another country to be legal tender (for example, Panama and El Salvador have declared US currency to be legal tender).

Credit
Credit is either the sum available to someone such as in a bank account or the bank’s trust in ones ability to meet payments when due.

Debit
Debit is used to describe someone withdrawing money either at the bank or by using a debit card. A debit card resembles a credit card and is used as an alternative to cash when making purchases. However, when purchases are made with a debit card, funds are withdrawn directly from the purchaser’s checking or savings account.

Deposit
To make a deposit is to put money (or other valuables) in a bank for safekeeping. The bank pays interest on the amount of money you deposit with them.

Fiat Money
Fiat money is a type of currency whose only value is that a government made a fiat (i.e. decreed) that the money is a legal method of exchange. It is not based in another commodity such as gold or silver and is not covered by a special reserve. Fiat money holds its value so long as holders of the currency feel that they can find an exchange partner for it at some later time.

Inflation
Inflation is the excessive or persistent increase in the general price level. This causes a decline in purchasing power and the devaluation of money. Since money in the bank earns interest, this can protect your money from inflation.

Interest
Interest is an amount of money paid for the use of a person’s or company’s money. The person who borrowed the money has to pay back the full amount borrowed plus the predetermined borrowing fee. This amount is usually a percentage of the original amount of money lent.

Investments
An investment is any company, business, stocks, etc. that you place money into in order to eventually earn profits from. Investments are a good way to make extra money for the future.

Money Order
A money order is a document that represents money. It is usually purchased at the post office since most money orders are used to pay for mail ordered purchases. However, money orders can also be a secure way to send money to relatives.

Note
A note or bill is money in the form of paper that we usually carry around in our wallets or money clips. Today, most bills carry larger denominations than coins. Though bills are not as durable as coins, they are more practical to carry around.

Stocks
Stocks basically represent shares of a company. When you buy stocks, you buy into a part of the company. Stock values increase or decrease depending on the company’s performance. Stocks can be good long term investments; however, they can also be risky due to stock market dynamics.

Unclaimed Money
Money that is being held by an organization and has yet to be claimed by the owner is called unclaimed money. If you have unclaimed money in an organization, it is your responsibility to claim it since the organization may not go out of its way to contact you.

Withdraw
To withdraw money (from your bank account) is to remove it from your current bank in order to spend it or transfer it elsewhere.