What are some commonly used banking terms?


Quick Answer

Commonly used banking terms include accrued interest, account agreement, variable-rate mortgage, debit, FDIC and mutual fund. The Office of the Comptroller of the Currency of the United States Department of Treasury maintains a website that helps consumers learn what these and other banking terms mean.

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Full Answer

The banking industry has no shortage of terms that consumers have to keep up with. Each term deals with a specific area of banking, and it helps to familiarize oneself with these terms.

Accrued interest is interest that has been earned, but not yet paid out. It usually builds up over a specific period of time.

An account agreement is a contract regarding an open-end credit agreement. It contains information on interest and other charges that affect a credit account, such as a credit card.

A variable-rate mortgage is a mortgage that has interest rates that periodically change. This is in contrast to a fixed-rate mortgage in which the interest rate does not change.

Debit is a term used to signify money owed to a lender. It can also be money taken from an account.

FDIC is the Federal Deposit Insurance Corporation. It is the government agency responsible for insuring the deposits in national and state banks. As long as the bank is part of the Federal Reserve, it is insured by the FDIC.

Mutual funds are controlled by investment companies. These companies raise money from its shareholders and uses that money to invest in stocks, money market accounts or bonds, and in return, mutual funds offer investors a professionally run way to make money.

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