Some banking terms may seem complicated, which is why we have compiled a list of some of the most common terms used in banking.
- Annual Percentage Rate (APR): The amount of interest, including compound interest, gained on an account per year.
- Annual Percentage Yield (APY): The amount of interest, excluding compound interest, gained on an account per year.
- Checking Account: Used for day-to-day purposes, like paying for something at the store, receiving pay checks, etc.
- Compound Interest: Interest applied to the original deposit and any new interest earned.
- Federal Deposit Insurance Corporation (FDIC): Insures that if a bank fails, any bank deposits up to $250,000 are protected. (Fun Fact: First Financial Bank is a member of the FDIC!)
- Interest: The price paid to either borrow money, or the cost charged to lend out money.
- Overdraft Fee: A fee incurred when there is not enough funds to cover a requested payment.
- Savings Account: Holds money for short or long periods of time. It is an interest-bearing account.