Deposit Glossary

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).

A record-keeping book for deposit accounts in which transactions such as deposits, withdrawals, bill payments and interest payments are recorded.

Bank statement
A statement detailing all transactions made through a deposit account, usually issued monthly.

Cash flow
The movement of cash into, through, and out of a particular entity, i.e. an individual’s deposit account.

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.

Charge account
A credit account extended by a retailer which is subject to specific interest rates and payment requirements.

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.

Compound interest
Interest earned on both the principal and the interest it has previously earned.

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.

Direct deposit
A payment deposited directly into an individual’s account.

Payments made by a borrower to an investor for the use of his or her money.

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.

Joint account
A deposit account registered to two or more parties.

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.

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.

An amount paid out by a bank to cover cheques and withdrawals that exceed the balance of funds available in a deposit account.

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.

The withdrawal of more money than an account actually has on deposit.

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.

Post-dated cheque
A cheque dated later than the date on which it was written, and only cashable at that later date.

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.

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.

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.

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.

Savings account
An interest-bearing account devoted to the accumulation of savings.

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)