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.
Alternative minimum tax (AMT)
An IRS method for ensuring that high-income earners pay their fair share of taxes. It disallows many common deductions. If the amount of tax owed under the AMT is higher than what's owed under the regular tax system, the taxpayer pays the AMT.
Annual Percentage Yield (APY)
The percentage, required by Truth in Savings regulations, to be disclosed on interest-bearing deposit accounts that reflects the total interest to be earned based on an institution’s compounding method, assuming funds remain in the account for a 365-day year.
Annuitizing an IRA
A way to withdraw money from an IRA without penalty before age 59 1/2. To do this you have to agree to take the money out in "substantially equal payments" over time based on your life expectancy.
Personal possessions of value, including cash, real estate and investments.
Average annual yield
The average yield per year over the life of the investment, assuming all principal and interest remain on deposit until maturity.
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.
A report of financial condition, including assets, liabilities and net worth.
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.