The banking industry is full of complex concepts and terminology that can leave a consumer feeling like his or her banker is speaking a different language. The following are some common terms that you may come across in your search for an ideal checking account.
ACH – ACH stands for the Automated Clearing House, a nationwide computer-based exchange for clearing deposits and payments electronically. The ACH system allows you to have loan payments deducted from your checking account, for example.
ATM Surcharge – This is a fee that is charged to you when you use an ATM of a bank that you don't have an account with.
Available Balance – The amount of money you have in your checking account that is available for withdrawal. It reflects the latest balance based on transactions posted to your account that day, including deposited funds, paid checks, withdrawals, and purchases made with your ATM Card or Check Card.
Bill Pay – An online banking service that allows you to manage and pay your bills online.
Checking Account – A bank account that allows you to deposit and withdraw money, make point-of-sale purchases, and write checks.
Debit Card – Provides the benefits of an ATM card while also allowing you to make purchases at millions of locations worldwide that accept MasterCard® debit cards. Funds used to cover the transactions are deducted from your checking account.
Direct Deposit – This service allows regular deposits such as payroll and social security payments to be made electronically into your checking account.
Interest-Bearing Account – These checking accounts usually require a minimum balance to open and you may need to maintain an even higher balance to avoid fees. Interest usually is paid monthly on your checking account.
Joint Checking – An account owned by two or more people, usually sharing a household and expenses. Each co-owner has equal access to the checking account.
Minimum Balance – This is the minimum amount of money that a bank requires you to keep in your checking account at all times. If you go under this amount you will be charged maintenance fees. The minimum balance is usually computed as the sum of daily balances in a billing period divided by the numbers of days.
Money Market Checking – A money market checking account usually pays a higher rate of interest than a checking or savings account does. Money market accounts often require a higher minimum balance to start earning interest, but they frequently pay higher rates for higher balances.
Online Banking – This service allows you to handle banking activities from your computer via the Internet. Online Banking enables you to open accounts, monitor account activity, transfer funds, pay bills, and more.
Overdraft Protection – This feature acts as a safeguard against unexpected cash-flow shortages. In the event that your checking account becomes overdrawn, your bank will extend a line of credit to you. Plans vary, but most banks charge a flat fee for each item they cover and many set a dollar limit on the total amount your checking account may be overdrawn at any one time.
Returned or "bounced" Check Charge – This is also referred to as an NSF or non-sufficient funds fee This is the amount of money charged to an account holder whose account lacks the necessary funds needed to cover a check, which is returned to the party who cashed it unpaid.
Service Charge – These fees are charged to customers for specific services or as a penalty for not meeting certain checking account requirements, such as insufficient funds in a checking account.