Bankrate's financial glossary
Did you run across an unfamiliar term when applying for a mortgage, credit card
or auto loan? Find the meaning here, along with definitions of other financial words
and phrases, in Bankrate.com's financial glossary.
Banking and the economy / Bankruptcy terms
Tax withheld from investment income, such as interest and dividends, to ensure that tax is collected on the income. Banks and other organizations are required to report to the IRS all interest and dividend payments you received, along with your Social Security number or other taxpayer identification number. If you don't give them correct reporting information, they are required to withhold 31 percent of your investment income. The IRS may also require the bank or other organization to withhold tax if it determines you have underreported your investment income. If backup withholding is taken out of your earnings, it will show up as "Federal income tax withheld" on the Form 1099-INT or Form 1099-DIV that the bank sends you each January.
An institution that acts as a financial intermediary by receiving money from depositors and lenders and also lending to borrowers. A bank must be chartered and meet certain criteria. Chartering is done by the Comptroller of the Currency for national banks, by the Federal Reserve System for state member banks, by the Federal Deposit Insurance Corporation (FDIC) for insured banks, and by state regulatory agencies. Also referred to as a commercial bank.
Bank holding company
A company that owns or controls one or more banks or companies associated with banking such as leasing companies, credit companies, etc.
It is usually identified by the word Bancorp or Bancshares in the name. The Federal Reserve Board of Governors regulates all bank holding companies.
Bank Secrecy Act
The Bank Secrecy Act was designed to help identify the source, volume and movement of currency and other monetary instruments transported into or out of the U.S. or deposited in financial institutions.
The difference between the interest rate a bank charges a borrower and the interest rate a bank pays a depositor.
An electronic payment system for the transfer of money between banks. The payments are conducted on the Federal Reserve System's federal wire (Fed Wire) network. Also known as a wire transfer.
A 360-day year, used so the year can be divided into 12 equal months of 30 days each. This makes interest calculations simpler and more consistent.
A legal proceeding that protects a debtor from legal action by some creditors. There are two basic ways of filing for personal bankruptcy. A Chapter 7 bankruptcy declaration gets rid of all debts (except some taxes and maybe alimony payments); Chapter 13 allows a borrower with a steady income to pay off bills over a 36- to 60-month period.
The informal name for Title 11 of the United States Code (11 U.S.C. § 101 - 1330), the federal bankruptcy law.
A private individual or corporation appointed in all Chapter 7, Chapter 12, and Chapter 13 cases to represent the interests of the bankruptcy estate and the debtor's creditors.