Glossary of Terms
Summary
It can sometimes feel like the financial world has its own language. Here we offer definitions to fee, checking, savings and credit card terms that people commonly ask about.
GLOSSARY INDEX
Account Agreement
Terms and conditions for use of a credit card and repayment of debt between the borrower and the lending institution. A copy is provided when an account is opened, and may also be requested through the issuing company’s customer service department.
Account Balance
For checking and savings accounts, your account balance is based on the funds put into your account (credits) and the funds taken out of your account (debits) We process debits and credits each business day.
For credit cards, it's the total amount owed on the account at a designated time, indicated on your monthly statement.
Account Statement
A printed or online statement for a checking, savings, or credit card account detailing all the debit and credit transactions for a given statement cycle.
Adjusted Balance
The balance subject to finance charge, which is calculated by adding up all transactions, then subtracting all payments or credits, just before printing the monthly credit card statement.
Annual Percentage Rate (APR)
The yearly rate of interest. The APR is listed in the account agreement as well as on monthly billing statements.
Automatic Payment
An arrangement that authorizes payments to be deducted automatically from a bank account (usually a checking account) to pay bills (such as insurance payments, rent, mortgage or loan payments). Payments are usually scheduled to be made on a certain day of the month.
Available Balance
Your available balance is the amount of money in your checking or savings account that is currently available to you. Maintaining a positive available balance is important to avoid overdraft or returned item fees. It is important that you keep your balance above zero. Your available balance reflects cleared or posted transactions and some pending transactions. Keep in mind that any transactions you have made but Bank of America has not yet received need to be subtracted from your available balance for you to know the exact amount of money you have to spend or withdraw.
Available Credit
The amount of money in a credit line that is available for immediate use.
Average Daily Balance
For checking and savings accounts, it is the sum of the daily account balances during a period, usually a monthly statement cycle, divided by the number of days in the period.
For credit card accounts, it is the balance subject to finance charge that calculates the balance for each day during the statement cycle. The average daily balance is determined by adding up the daily balances, then dividing them by the number of days in the cycle.
Average Daily Balance
For checking and savings accounts, it is the sum of the daily account balances during a period, usually a monthly statement cycle, divided by the number of days in the period.
For credit card accounts, it is the balance subject to finance charge that calculates the balance for each day during the statement cycle. The average daily balance is determined by adding up the daily balances, then dividing them by the number of days in the cycle.
Balance Subject to Finance Charge
The balance amount that is used to calculate a finance charge for a periodic statement. Three of the most common methods are the average daily balance, the adjusted balance, and the two-cycle balance. The account agreement explains which method a given credit card company uses.
Balance Transfer
The act of transferring debt from one account to another. Typically done between credit cards to take advantage of a lower rate offer or to consolidate debt to lower monthly payments.
Borrowing Agreement
Terms and conditions for use and repayment of debt between the borrower and the lending institution.
Bounced Check
A check which a bank returns unpaid because there are not enough available funds in the account.
Cancelled Check
A check that has been paid. A cancelled check may generally be used as proof of payment.
Cash Advance
Transaction to access cash from a credit card account. Cash advances can be made using an ATM, at a bank, by phone or through a credit card cash advance check.
Cash Equivalent Transaction
A purchase of “cash equivalents” — items that can be used as or changed into cash — from any seller other than a financial institution. Examples of cash equivalents may include casino gaming chips, foreign currency, money orders, wire transfers and travelers checks from a non-financial institution. Please refer to your account agreement to find out what types of transactions your credit card issuer considers to be cash equivalents.
Check Enclosure
A service where the bank returns the checks with the account statement.
Check Image
A service where you receive images of the front of your cancelled checks. Each account statement includes images of checks (up to 10 per page) that posted to your account during the statement cycle. You can view and print copies of the front and back of checks posted within the last 90 days by signing on to Online Banking, or you can request check copies by visiting your nearest Bank of America Banking Center, or by calling the customer service number on your statement.
Checking Account
A banking account in which you place funds and withdraw available funds on demand, typically by using a debit card or writing a check. Checking accounts carry FDIC insured to the maximum amount allowed by law. There are checking account options to choose from so that you can bank the way you prefer.
Collected Balance
The balance in a Deposit Account, not including deposited items that have not yet been paid, or collected. See also Glossary term, "Account Balance".
Combined Balance
Any combination of balances from linked accounts, such as savings, checking, and CDs. We use combined balances to assess whether balance requirements have been met in order to waive the monthly fee on some checking and savings accounts.
Compound Interest
Interest that is calculated not only on the principal balance in the account, but also on the accumulated interest. The more frequently interest is compounded, the higher the effective yield.
Credit History
Includes account types, remaining balances, payment status, collection information and inquiries. Credit bureaus collect and organize information about people who have credit. The information generally goes back seven to ten years. This report includes your name, address, employer, length of employment and previous credit history.
Credit Score
A number rating the quality of an individual’s credit. Credit bureaus calculate this number, often with the assistance of computer systems. Lenders use this score as part of the process of assigning rates and terms to the loans they make. There are several Web sites that allow consumers to request their score online. One common type of credit score is the FICO® score.
Cut-Off Time
A time of day specified by Bank of America after which a transaction will not be processed for that specific day. Processing won't always be completed on the day it starts. The cut-off time is usually before the banking center closes and varies by banking center. The cut-off time for an ATM is usually posted on the ATM.
Debit
A decrease in a checking or savings account balance such as a withdrawal of money.
Debit Card
A card that Bank of America issues to checking customers that can be used anywhere Visa debit cards are accepted. The money used is deducted directly from the customer's checking account. Debit cards can also be used to withdraw cash or make deposits at Bank of America ATMs.
Default Rate
The APR(s) which may be applied to your account under certain circumstances, such as if you pay late, miss a payment, pay less than the full amount due by your payment due date, or allow your balance to exceed your credit limit. Also known as “Default APR” or “Penalty Rate.”
Direct Deposit
Direct Deposit is a service that automatically transfers your recurring deposits to your checking or savings account. Recurring deposits can include: salary, pension, Social Security and Supplemental Income (SSI) benefits, or other regular monthly income.
Disclosure
Information pertaining to account services, fees and regulatory requirements.
Electronic Funds Transfer (EFT)
Any transfer of funds initiated by electronic means, such as an electronic terminal, telephone, computer, ATM or magnetic tape.
Extended Overdrawn Balance Charge
An Extended Overdrawn Balance Charge occurs when your account is overdrawn and continues to be overdrawn for five consecutive business days. The amount is in addition to Overdraft Item Fees and NSF: Returned Item Fees.
Finance Charge
The finance charge is the interest plus transaction fees and any other fees charged on your credit card account.
Grace Period
A grace period is an interest-free period between the time of a purchase and the payment due date shown on your next statement. Cash advances generally do not have a grace period, and there is no grace period for payments—payments are due no later than the payment due date.
Hold
A hold is a delay in the availability of funds that you have deposited into your checking or savings account. When Bank of America places a hold on your deposit, you will not be able to use the funds until the hold expires.
Hold Period
The time between when you initiate a transaction and when the funds are released for use.
Insufficient Funds (NSF) Item
An Insufficient Funds (NSF) Item occurs when there are not sufficient funds in a checking or savings account to cover a given transaction and the account drops below zero balance. In this case, we do not pay the transaction, but return the item unpaid and charge you an Insufficient funds fee.
Interest Rate
A rate of interest charged for the use of a credit card, loan or line of credit, expressed as a percentage of the total amount loaned. Different types of loans charge different rates of interest.
Linked Account
Linked accounts mean that the combined balances in your linked accounts are added together to assess whether balance requirements have been met to waive the monthly fee on some checking and savings accounts. You can link checking, savings, Individual Retirement Account (IRA), Money Market Savings, or certificate of deposit (CD) account(s) to waive monthly maintenance fees.
Minimum Daily Balance
This term relates to checking and savings accounts. To determine the Minimum Daily Balance, we look at the lowest daily balance you had in your checking or savings account during a statement cycle. For many of our accounts, we use the Minimum Daily Balance to determine whether a monthly maintenance fee will be charged to your account.
Monthly Maintenance Fee
The fee charged to maintain a checking or savings account. Also known in California, Washington and Idaho as a Monthly Service Charge. This fee covers the costs of maintaining your accounts and use of Online Banking, our banking center and ATM network as well as processing of your account activity and statements. There are several ways to have monthly maintenance fees waived.
Online Banking
Online banking lets you get account information and manage banking transaction all from a PC. Through Bank of America Online Banking, you can review all your Bank of America checking and savings accounts, credit cards and other banking services such as a home loan or home equity product.
Overdraft Item
An Overdraft item occurs when we pay your check or other transaction even though you do not have enough available funds in your account to cover the given transaction. In this case, we pay the transaction and charge you an Overdraft Item fee for each item.
Overdraft Protection
Overdraft Protection allows you to link your Bank of America checking account to a Bank of America savings account, credit card or line of credit so that if you do not have sufficient available funds to cover a check or other debit, funds are automatically transferred from the available balance in the linked account to cover the overdraft. There is a Overdraft Transfer Fee associated with most Overdraft Protection.
Overdrawn
An account is overdrawn when it has been drawn on in excess of available funds.
Payment Allocation
The method used by your credit card issuer to assign all or part of your payments. For instance, balances with lower APRs may be paid off before balances with higher APRs. Each issuer determines payment allocation for their accounts; customers may not decide payment allocation.
Person-to-Person Transfer
A transfer of funds from one customer’s account to another customer’s account.
Posted Transaction
When a transaction or item appears on your account statement, it is referred to as having “posted.” Posted transactions have been processed by your issuer, but funds for the transaction may still be in transit. Unposted transactions have not yet been processed, but may affect the amount of credit available. See your account agreement for details.
Promotional Rate
A rate that is lower than your standard interest rate and is valid only for certain transactions for a limited period of time.
Reduced Overdraft Item Fee
When your account is overdrawn by an amount less than $5 at the end of the day, we will apply a reduced overdraft item fee. In the case, we reduce the standard overdraft item fee from $35 to $10.
Residual Finance Charge
The amount of interest that has accrued from the closing date of the last statement and the date that balance was actually paid. This only occurs on credit card balances that are accruing finance charges.
Savings Account
A banking account in which you place funds and receive interest for doing so. Savings accounts carry FDIC insured to the maximum amount allowed by law. There are many savings options to choose from so that you can save the way you prefer.
Scheduled Transfer
An arrangement that moves funds from one account to another automatically on a pre-arranged schedule; for example, every payday or once a month. With a scheduled transfer, money is transferred automatically from your checking account to your savings account monthly. It is an good way to save money automatically.
Simple Interest
The interest calculated on a principal sum, not compounded on earned interest.
Statement Billing Cycle
The amount of time between your last statement date and your current statement date. For instance, if your current statement is dated October 1, and your previous statement was dated September 1, there were 30 days in your statement cycle.
Stop Payment
When you ask a bank not to pay a check or payment you have written or authorized. Stop payments are generally placed on lost or stolen checks or on checks related to disputed purchases. Stop payment orders generally expire after 6 months and a fee usually applies.
Transaction Fee
A fee that may be charged when making certain types of transactions with your credit card. It is usually a percentage of the total amount of the transaction. For instance, a transaction fee is often charged when you take a cash advance with your card.
Transaction History
For checking or savings accounts, it's the section of your checking or savings statement that itemizes every action on your account during that statement cycle.
For credit cards, it's the section of your statement that itemizes every action on your account during that statement’s billing period.
Two-cycle Balance
Calculating the balance subject to finance charge by averaging both the current month’s transactions and the previous month’s transactions.
U.S. Prime Rate
The U.S. Prime Rate is the prime lending rate offered by a number of the country’s largest banks. It is frequently cited as a standard for general interest-rate levels in the economy. The U.S. Prime Rate is often used to calculate variable interest rates. A set number, or margin, determined by the issuer, is added to the U.S. Prime Rate to get the variable interest rate. When the Prime Rate goes up or down, the variable rate may change.
Unsecured Line of Credit
A line of credit is an agreement by a financial institution to loan money to a borrower up to an agreed upon maximum. Interest is only charged on the money that is actually withdrawn from the line of credit. With an unsecured line of credit, the bank does not hold any of the borrower's property as collateral.
Wire Transfer
With wire transfer, we deposit money electronically into your account or the account you designate (this can be a business or another person's personal account). Wire transfers are one of the fastest ways to get money into an account.
Withdrawal
A removal of funds from a checking or savings account.