30 English Banking Terms Every Businessperson Should Know
You can have a checking account and a savings account. The checking account (also calledcurrent account in British English) allows you to take out money anytime you want. The savings account allows you to save money and also earn interest (see below).
“He needed to transfer some money from his savings account to his checking account so that he could pay for the new car he wanted to buy.”
Credit is the money you receive in your bank account or the money a bank lends you. Credit can also refer to the financial reputation (background or record) you have when you’re considering borrowing money from a bank. Acredit card is a card that allows you to spend more money than you have, but then you have to pay interest. The word credit can also be used in a general sense: When you give someone credit, you acknowledge their efforts or worth.
“His credit was good, so he didn’t expect the bank to reject his loan application.”
This is money taken out of your bank account or money you owe. A debit card allows you to use the money in your account by paying in stores or online. You can also use this card by getting money from a cash machine or ATM (see below). In addition, you can use this word as a verb: To debit money means to take out money from an account.
“I prefer using a debit card, because I’m not tempted to spend more money than I have in my account.”
“The bank debited the money from his account.”
Your balance is the money you have in an account. This is the difference between what you spend (debits) and what you receive (credits).
“I need to check my balancebefore completing the transaction (exchange).”
A loan is money you borrow from a bank or another institution or person. The bank lends (gives) you the money, and you borrow(receive) it. The bank is thelender, and you are the borrower.
“They needed a loan to buy the car of their dreams, but they couldn’t find a lender.”
6. Student Loan
Student loans are loans that are used by borrowers to pay for education fees. Students loans are supposed to be paid back once the borrower finishes studying and starts working. Some lenders offer student loans at lower interest rates (see below).
Example: “You need to get a good job right after you graduate, or you’ll be paying for your student loan for a long time.”
A debt is a sum of money that’s owed. You can also use the word in a general way: If you are in debt to someone, it can mean you owe them a favor or are grateful for something.
“He couldn’t pay his debt, so he had to sell his car.”
8. Interest Rate
If you borrow money from a bank, you’ll need to pay it back. In addition to this, you’ll need to pay interest. The amount of interest is decided by an interest rate, which is calculated for a given period of time. If you have a savings account, the bank will pay you interest for being able to use your money over a certain period of time.
“He was researching the banks that offered the lowestinterest rate for loans.”
9. To Withdraw
To withdraw money is to remove money from an account.
“He wanted to withdraw some money from his checking account, but he forgot his card at home.”
10. To Overdraw
To overdraw is to try to withdraw more money than you have in your account. In this case, you generally have to pay some extra fees. It’s advisable (a good idea) to pay attention to your balance so you don’t overdraw money.
“He was careful not tooverdraw money from his account, because the penalties are quite high with his bank.”
This is money that you withdraw from your account when you no longer have available funds. This is like a loan the bank gives you.
“She received an overdraftnotice when she spent more than she had in her checking account.”
ATM stands for Automated Teller Machine, which is a machine that helps you make bank transactions just by using your card. The wordteller refers to the bank clerk who helps you with transactions. Cash-point or cash machine are also used.
“I need to stop at the ATM to take out some cash.”
13. Direct Debit
This is an arrangement to make regular payments of different amounts, usually for utilities (services like electricity and water) or credit card bills. By using direct debit, you avoid having to make monthly transactions.
“He used a direct debit for his mobile phone bill.”
14. Standing Order
This means an arrangement to make regular, fixed payments automatically from one’s account.Standing orders are different from direct debits because the amount paid cannot vary (change).
“He kept forgetting to pay his loan installments so he decided to go for a standing order.”
15. Deferred Payment
A deferred payment is a payment that’s postponed (put off) for a later date because you cannot complete the transaction when you would normally complete it.
“He was going abroad for a month, so he decided to usedeferred payment for his electricity bill.”
A bank statement is a list of all the transactions that happened in a bank account over a certain period of time. It shows all the debits, the credits and the balance.
“He wasn’t sure why his balance was so low, so he asked for a bank statement.”
17. Personal Identification Number (PIN)
This is a secret combination of numbers that only account holders can use to access their accounts.
“After three failed attempts to remember his Personal Identification Number, he had to contact the bank.”
18. Safety Deposit Box
A safety deposit box is a safe that the bank rents for people to store their valuable items.
“After having his house broken into twice, he decided to keep his important documents in asafety deposit box.”
19. Credit Limit
Your credit limit is the maximum amount of money a bank will let you borrow based on your financial situation.
“After she reached her credit limit, she decided to spend less and save more.”
A mortgage is an agreement by which someone can borrow money from a bank to buy a house. The bank becomes the owner of the house until the debt is paid up.
“They need to take out amortgage to buy a house.”
This is something, like a house, that’s used as a guarantee (assurance or backup) when taking out a loan. If the borrower cannot pay the debt, the bank becomes the owner of thecollateral.
“She didn’t have anycollaterals, so she decided to take out a mortgage.”
Appraisal is the evaluation of the value of a property, usually done by a bank representative. An appraisal is usually carried out before taking out a mortgage.
“They wanted to use their house as collateral for the loan, but first the bank needed to appraise its value.”
A guarantor is a person who agrees to pay for someone else’s debts, if this person cannot pay.
“His parents offered to act asguarantors for his student loan.”
This is the complete payment of a loan.
“She was feeling relieved that she had completed the payoffof her debt last month.”
A clause is a part of a contract that gives details about a certain situation that’s covered by the contract.
“All the bank contracts have aclause that specifies the bank charges and the interest rate for a specific account.”
Prepayment is settlement of a debt before the due date. Sometimes there are prepaymentpenalties that banks charge in this case.
“She forgot to check theprepayment clause and was quite surprised to see she had penalties to pay to the bank.”
27. Bank Charges
Bank charges are all the fees a bank requires you to pay in exchange for its services (using a credit or a debit card, making transactions, taking out loans). Bank charges can also be referred to as commissions.
“He chose his bank carefully, by looking not only at the interest rates, but also at allthe bank charges.”
28. Business Days
Business days are days on which a bank or business is open. Similarly, business hours refers to the hours when a bank or business is open.
“You can only complete transactions in the bank onbusiness days, but you can use Internet banking (see below) whenever you want.”
A branch is a location where a bank offers services to customers.
“This bank only has threebranches in the city, but there are plenty of ATMs.”
30. Electronic Banking
Electronic banking is a system that allows customers to complete banking transactions on the Internet. It’s also called online banking, Internet banking or e-banking.
“Customers find electronic banking very convenient because they no longer need to go to the bank to make transactions.”
Multiple Choice Vocabulary Exercise
Now have a look at this vocabulary exercise and test yourself! Choose the right word from the three options provided.
1. She decided to open a ___ account at the bank that offered the best interest rate available on the local market.
A. saving / B. savings / C. saved
2. If you’re not sure your ___ is correct, you should ask for a bank statement.
A. balance / B. total amount / C. money
3. She preferred using a ___ card rather than a credit card because she sometimes had a tendency to spend too much.
A. debited / B. debit / C. debitable
4. Avoid ___ money from your account by keeping track of your transactions online.
A. withdrawing / B. overdrawing / C. removing
5. He realized that paying all his utility bills was taking way too long, so he decided to give ___ debit a try.
A. direct / B. standing / C. straight
6. He forgot to make arrangements for ___ payment while he was abroad, so he was worried he would have his electricity cut off.
A. delayed / B. postponed / C. deferred
7. Having a credit ___ is a good way to limit the effects of credit card fraud.
A. limitation / B. limit / C. measure
8. If she had known about the penalties, she wouldn’t have considered ___ such a good option.
A. advance payment / B. prepayment / C. early payment
9. As he didn’t have any collaterals, he needed a ___ to take out a loan.
A. guarantor / B. guarantee / C. warranty
10. You may find yourself in the unpleasant situation of having to pay a lot of bank ___ if you don’t research banks carefully before taking out a loan.
A. taxes / B. tariffs / C. charges
11. As they didn’t want to live in a rented apartment, their only option was to ___ a mortgage.
A. take away / B. take up / C. take out
12. The interest ___ wasn’t the best on the market, but she chose that bank because it had been recommended to her by her parents.
A. rate / B. rating / C. level