Banking & accounts glossary

A–D

• ACH (Automated Clearing House) — the network banks use to transfer money electronically. Most direct deposits and bill payments go through ACH.
• APY (Annual Percentage Yield) — the real annual rate you earn on a deposit, including the effect of compounding.
• CD (Certificate of Deposit) — a time deposit that pays a fixed rate for a fixed term. Early withdrawal usually forfeits some interest.
• Checking account — a bank account designed for daily transactions, with unlimited deposits and withdrawals.
• Compound interest — interest earned on both the principal and previously earned interest. The engine behind long-term growth.
• Direct deposit — employer-initiated electronic transfer of your paycheck straight into your bank account.

E–M

• FDIC (Federal Deposit Insurance Corporation) — the government agency that insures bank deposits up to $250,000 per depositor, per bank.
• HYSA (High-Yield Savings Account) — a savings account, usually at an online bank, that pays 10–20x more interest than traditional savings.
• Joint account — a bank account owned by two or more people, each with full access.
• Minimum balance — the lowest balance you can maintain without incurring fees or losing interest.
• Money market account — a bank deposit account that typically pays more than regular savings, often with limited check-writing ability.
• Money market fund — an investment product (not a bank account) that holds very short-term, high-quality debt securities.

N–Z

• NCUA (National Credit Union Administration) — the equivalent of the FDIC for credit unions. Insures deposits up to $250k.
• NSF (Non-Sufficient Funds) — when you try to spend more than you have. Banks may charge a fee.
• Overdraft — spending more than your account balance. The bank may cover it and charge a fee, or decline the transaction.
• Overdraft protection — a linked savings account or credit line that covers overdrafts automatically, usually at lower cost than overdraft fees.
• Savings account — a bank account designed for holding money you don't spend daily. Usually earns interest.
• T-bill (Treasury bill) — a short-term US government debt security. Considered the safest investment in existence.
• Wire transfer — a direct bank-to-bank electronic transfer, faster than ACH but usually costs $15–30.
• Zelle — a peer-to-peer payment network built into many bank apps. Instant and usually free.