MSN Money

Jargon Buster Guide

JARGONBUSTER
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account - a fund that a user has entrusted to a bank that provides a number of services. It also keeps a record of financial transactions
account balance - the amount of money in an account. Equal to the net of debits and credits to that account
account payment - a payment from your account to another account not linked to your portfolio
account statement - a record of transactions and their effect on the account balance for a specific account and period of time
administration fee - a fee charged for the operation of an account
affiliate card - a card issued by a bank but linked to a determined club or charity which benefits from the use of the card
APR - Annual Percentage Rate. The yearly cost of a loan expressed as a percentage
ATM - Automated Telling Machine. A machine which enables one to perform basic banking transactions (such as withdrawals, transfers and balance enquiries) at anytime
balance - the amount of money in an account
bank account - a record of financial transactions with your bank. A bank account is for everyday use and allows the user to perform a variety of transactions. Also called a current or cheque account
bank charges - the cost incurred by an account holder whilst running their account for transactions such as payment, withdrawals and deposits. Bank charges are levied by your bank account provider
bank fees - as above, but are often used to specify the regular cost of having a bank account whereas charges relate to the cost specific transactions
basic interest - interest calculated on the original sum only. Also called simple interest and ordinary interest. Compare compound interest
bond - a loan secured to your house as a guarantee. Also called a mortgage or home loan
bounced cheque - a cheque that cannot be paid because of insufficient funds in the account
certified cheque - a cheque which the bank guarantees. A certified cheque cannot bounce
cheque account - an account which allows the holder to make payments by cheque against deposited funds in that account
cheque book - a book of blank cheques
compound interest - interest calculated on the original sum and previously accumulated interest. Compare basic interest
credit card - a card that may be used to borrow money or make purchases on credit
credit limit - the maximum amount of credit provided by a card
current account - see bank account
debit card - a card that may be used to withdraw money or make purchases using the money in the account that it is linked to
debit order - an authorisation that one gives to a third party that permits the bank to make monthly payments from the user’s account to the third party. Also called stop order
deposit - 1. money paid into the user’s account. 2. money paid in advance to show the customer’s intention to complete the purchase
dishonour - to not pay, for example for a bounced cheque
effective annual interest rate - the actual annual interest rate that takes into account compounding of interest and changes in interest rates
fixed rate - a rate of interest that is fixed at a specific value. Compare variable rate
interest - 1. an amount charged to the borrower for the use of the lender’s money. 2. the return derived from savings or an investment
loan - a sum of money borrowed by the user from a lender, often a bank
minimum balance - the minimum sum that must be held in an account for it to be operational
mortgage - see bond
NCA - National Credit Act, legislation introduced by government regulating how credit and borrowing is provided in South Africa, bringing increased protection for consumers
online banking - a facility enabling users to perform banking transactions via the internet
ordinary interest - see basic interest
overdraft - the extension of an account by a lending institution which allows the user to make payments and withdrawals on credit. The amount the user is overdrawn is the amount by which the debits from the account exceed the deposits into the account. Overdrafts are almost always charged at a fee and a debit interest rate
PIN - Personal Identification Number. A number used to uniquely identify the user
POS device - Point Of Sale device. Enables the user to withdraw cash when making purchases at stores equipped with this device
prime rate - the interest rate set by a bank or lender on which they base their lending rates. So if the prime rate is 12% and a lender charges prime -1 for a mortgage, for example, the rate paid by consumer will be 11%
repo rate - the key interest rate set by the Reserve Bank and the rate at which they lend money to other banks and lenders. A bank’s prime rate will take its lead from the repo rate, so if the repo rate increases, prime rates are likely to follow. Increases in repo rate are usually decided by the Reserve Bank for economic reasons, such as raising it to stem consumer borrowing, or reducing it to stimulate business spending
savings account - an account with limited banking facilities but higher interest rates allowing the user to earn interest on their savings
simple interest - see basic interest
stop order - see debit order
Sub-prime mortgage - A type of mortgage usually given to a borrower with a poor payment record or with a high credit risk. Sometimes known as specialist or non-standard mortgage
transfer - the movement of funds from one account to another
traveller’s cheque - a cheque issued by a financial institution to the user that functions as cash but is protected against loss or theft
variable rate - a rate of interest that varies depending on some other indicator, for example, the prime rate
withdrawal - a removal of funds from an account

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JARGONBUSTER