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10 must-know checking account terms
By
Bankrate.com
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.
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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