Important Banking Terms You Need To Know

Almost everyone gets a little overwhelmed at opening their first checking account. With so many important banking terms, it can be hard to determine what you need to know first. It’s a little more complicated than just using cash for everything, and you need to keep careful track of all your spending. Receipts will be a great help for you, and will help at the end of the year too.

Banks are expanding their service options to accommodate professionals and stay-at-home moms alike. When people travel, they need assurance that their money will be safe and yet accessible when they need it. However, those who work from home need online banking and branches that can be easily reached. The two most common accounts are those of Checking and Savings.

“Debit or Credit?” is also a familiar question these days whenever you purchase something at a local store. It is up to you to decide which you prefer, and knowing the difference is the first step. If you choose debit, then the amount of your purchase will be deducted from your account immediately. However, if you choose credit, then it will held from your account, and run through on a delay as a regular credit transaction would be.

What’s the difference? If you’re buying something, you’re buying it–why does it matter when it comes out of your account? Well, sometimes people don’t accept debit cards, but they do accept credit transactions. And vice versa, having a combination card allows you to purchase from both kinds of vendors easily. Also, a credit card can be used online, where a debit card cannot.

If you receive a credit card application in the mail or online, one thing you will want to check out is the APR, or Annual Percentage Rate. This is how much interest will be attached to your account balance and can sometimes increase if you do not make your payments on time. When your credit score is good, these can be often very low, saving you lots of money on interest payments.

If you own a home, then you will know what the word equity means. However, for those of us still working to get there, it may be unfamiliar. Equity is the amount of your mortgage that has actually been paid off. By building up this number, you can use it as collateral for other loans, or remodeling later in time. Once you have been making payments for a few years, you should have a fair amount of this built up for your family’s use.

There are many important banking terms, but certain ones are used much more often. Keep up to date on your knowledge of how your bank’s policies affect your various accounts. By learning how your financial institution works with your money, you will be more informed as to what works best in your benefit.

Understanding banking terms is not difficult, just find your closest bank branch.

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