The banking definitions you need to know to productively use your checking and savings accounts.
Banking jargon can often be confusing. But learning what common banking terms mean for your bottom line can help you earn interest, avoid fees, and make the most of your bank’s services.
Here is a glossary of basic but important banking lingo to understand before you sign up for a new account.
ACH stands for Automated Clearing House. It’s an electronic network that transfers funds from bank to bank and is used to help you make electronic transactions. For instance, tax refunds from the IRS come via ACH transfers as do some PayPal and Venmo payments. These transfers are usually free but may take a business day or so to process.
Annual Percentage Rate (APR)
Some bank savings accounts pay interest on your balance. The APR is the rate of interest your account earns in a year.
Annual Percentage Yield (APY)
This is another measure of interest being paid, which takes into account the effect of compound interest.
Automated teller machines allow you to make deposits and withdraw cash without visiting a branch teller. If the ATM is in your bank’s network, there is usually no fee involved. When you use an ATM outside of your network, you will most likely pay a fee to the ATM operator and to your bank.
Many banks offer apps and other digital tools that help you keep real-time track of your checking account balance so you can avoid overdraft and nonsufficient funds fees. They also allow you to make mobile deposits of paper checks, make transfers, and automatic bill payments and sometimes provide notification if your account balance falls below a certain level.
A checking account is all about withdrawals and deposits. Because checking accounts are like cash, you’ll be able to make unlimited deposits and withdrawals. You can deposit money using ATMs, direct deposit, or visits to a bank branch. You can access or spend your money using ATMs, paper checks, electronic debits, and debit cards tied to your account.
Most bank checking and savings accounts, such as those available at Fifth Third, are insured up to $250,000 per account by the Federal Deposit Insurance Corporation (FDIC), an independent government agency.
You’ll see this word if you make a transaction that results in a negative account balance and you don’t have overdraft protection. Your check or electronic transaction will be rejected for nonsufficient funds. You may also encounter a bank fee and potentially other fees from the payee when this happens.
An overdraft happens when you make a payment or other withdrawal from your bank account and you don’t have enough money in your account to cover that transaction. Most banks offer overdraft protection for these instances. The bank goes ahead and pays for the transaction despite your negative balance. But consumers may have to pay overdraft fees when that happens unless they have a Fifth Third Momentum® Checking Account with Fifth Third Extra Time®1, which gives you an extra business day to make a deposit to avoid an overdraft fee.
This is a deposit or payment that is still being processed by your bank. You’ll see the word “pending” next to the transaction online or on your app. A pending deposit won’t be reflected in your bank balance until it is processed, so keeping an eye on pending transactions can also help you avoid overdraft and nonsufficient fund fees.
A Fifth Third Momentum® Savings Account can be a good place to build emergency savings or keep funds you’ll need in the relative short term while potentially earning interest on your funds. The number of free withdrawals or transfers is limited; you may incur a fee after a particular frequency.
A wire transfer is also used to move funds from one bank account to another, but in a wire transfer, the money will be available for use the same day as the transfer takes place. There is traditionally a fee for this service.
Looking to open a checking or savings account? Find out which Fifth Third account is best for you.