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10 must-know checking account terms

Editor's Note: On Oct. 3, 2008, Congress raised the FDIC insurance amount to $250,000. This change will be in effect until Dec. 31, 2009, unless it is renewed.

There's a lot more to checking than balancing your checkbook, and many people have trouble even doing that. If you want to be organized and informed, you need to learn the lingo of the checking world. We've picked the top 10 checking account terms to help get you started.

ATM surcharge -- Fee charged for a non-account holder to use a bank-owned ATM. Example: You have an account at Bank A but use Bank B's ATM. Bank B will charge you a surcharge. Make sure to review what your bank charges you to use another bank's ATM system. You may have to pay a surcharge to Bank B plus a non-bank owned ATM charge to Bank A.

Debit card -- A payment card that is linked directly to a customer's bank account. Some cards require a personal identification number. Others require a customer's signature. A PIN-based or direct debit card removes a purchase price from a customer's checking account almost immediately. A signature-based or deferred debit card has a Visa or MasterCard logo and removes the purchase price from a customer's bank account in two or three days.

Electronic funds transfer -- The transfer of money between accounts by consumer electronic systems, such as automated teller machines (ATMs) and electronic payment of bills.

Interest checking account -- Liquid account, providing FDIC insurance to $100,000 per person, that permits unlimited check-writing and typically pays interest.

 

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Lifeline account -- A no-frills account for low-income customers, which is mandated by law in some states. These accounts are typically checking and savings products that have little or no monthly fees, require little if any minimum deposit and balance, and allot a set number of checks each month.

Money market account -- A bank account that restricts the type and number of certain withdrawals and earns interest similar to that paid by money market funds.

Negotiable Order of Withdrawal account -- Liquid account, providing FDIC insurance to $100,000 per person, that permits unlimited check-writing and typically pays interest. Also known as a NOW account.

Overdraft -- The amount that a check exceeds the available balance in the payor's account; also insufficient funds.

Returned or "bounced" check charge -- Also referred to as an NSF or non-sufficient funds fee. The amount of money charged to an account holder whose account has insufficient funds available to pay the check, which is returned to the party who cashed it unpaid.

Service charge -- Fees charged to customers for specific services or as a penalty for not meeting certain requirements, such as insufficient funds in a checking account.

For a complete list of checking terms, check out our glossary.

-- Posted: April 6, 2004

 

 

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