Amortization methods differ based upon the type of loan. Refer this guide and know all the frequently used banking terms from A to Z online. See related questions about Electronic Transactions. See European option, Bermuda option and Asian option. In a merger, the bank that absorbs the bank acquired. Assignment of seller's interest in land contractA document used in real estate loans when the mortgaged property is subject to a land contract or article of agreement under which it is being sold over time to a third party. Tips for Making a Batter: Take care not to over-mix batters or too much gluten w… See related questions about Inactive Accounts. A UGMA provides a child under the age of 18 (a minor) with a way to own investments. Once canceled, a check is no longer negotiable. Affirmative covenantA provision in the lender's documents that requires the borrower to do something in the future. Thus the transactions are completely neutral from the broker/dealer's perspective. If that information is entered incorrectly, there is an encoding error.]. It includes negotiable instruments, sales, stock transfers, trust and warehouse receipts, and bills of lading. Each check in encoded at the bottom with the dollar amount of the check. See related questions about Flood Insurance. A comprehensive, but cumbersome, and somewhat obsolete, method of verifying the ownership and encumbrances of a parcel, or parcels, of real estate. There is no fee to the borrower, who receives a full refund of all fees paid. For example, if your statement cycle date was January 10 and the bank received your payment on January 20, there were ten days for which interest accrued. The amount automatically protected will depend upon the balance of the account on the day of review. ADRs are sold and traded in the United States. The person (or bank) who is expected to pay a check or draft when it is presented for payment. Account debtorAn individual or business that is obligated to pay on an account, chattel paper, contract right, or general intangible. ArbitrageurAn individual or broker who engages in arbitrage. The most common internal methods are self-assessments. A check on which the drawer's signature has been forged. Generally, any credit sale agreement in which the amount advanced, plus any finance charges, is expected to be repaid in full by a specified date. Rates that may change at the payer's discretion are sometimes called variable rates, easily confused with floating rates, which change at contractually specified times by contractually specified amounts - a very different arrangement. AgingA report or schedule of all outstanding accounts payable or accounts receivable that lists all account debtors or creditors by name, shows the total amount due to each debtor, and shows how much of the amount due to each debtor is due within specific time periods. The ABO must be disclosed in a footnote to the financial statements. ALLLAn acronym for allowance for loan and lease losses. The face of the check bears the words "certified" or "accepted," and is signed by an official of the bank or thrift institution issuing the check. See related questions about Preauthorized Payments. Insurance offered by a private insurance company that protects the bank against loss on a defaulted mortgage up to the limit of the policy (usually 20 to 25 percent of the loan amount). Acid test ratioAnother name for the quick ratio. The power of attorney may be for a definite, specific act, or it may be general in nature. 1. Measurement of the accumulated benefit obligation uses the historical compensation rates for pay-related benefit plans. In that case, an asset-sensitive entity's economic value of equity increases when prevailing rates rise or declines when prevailing rates fall. AICPASee American Institute of Certified Public Accountants.a.k.a.Initials for "also known as". A checkless system for paying recurring bills with one authorization statement to a financial institution. A Collective Investment Fund (CIF) is a trust created and administered by a bank or trust company that commingles assets from multiple clients. See FAS 115, held-to-maturity, and trading. This score represents the answer from a mathematical formula that assigns numerical values to various pieces of information in your credit report. Generally, information remains on ChexSystems for five years. A category of personal property defined by Article 9 of the UCC. The parent cannot withdraw the money to use for his or her own needs. A savings account that offers a higher rate of interest in exchange for larger than normal deposits. A Abstract of title [skip to next word] A written history of all the transactions related to the title for a specific tract of land. As an alternative to a security agreement physically signed by the debtor, the 2000 amendments to the UCC provide for an authenticated security agreement. Very useful for engineers preparing for bank exams. Also, a penalty imposed by a card issuer against a cardholder's account for failing to make minimum payments. See related question about Credit Disability Insurance. A business day during which an office of a bank is open to the public for substantially all of its banking functions. Available balanceThe balance in an account that can be invested or withdrawn. American depository receipt (ADR)Trust receipts equal to a specific number of shares of corporate stock issued in a foreign country. Undertaking to act as executor, administrator, guardian, conservator, or trustee for a family trust, authorized trust, or testamentary trust, or receiver or trustee in bankruptcy. A form of extending an unpaid loan in which the borrower's remaining unpaid loan balance is carried over (renewed) into a new loan at the beginning of the next financing period. ... Bank - In Australia, banks are financial institutions authorised under the Banking Act 1959. was not authorized by the cardholder or the cardholders' designee. The impact of a change in prevailing interest rates may be measured in terms of the change in the value of assets and liabilities. Flood insurance protects against water from an overflowing river or a hurricane's tidal surge and also covers damage from water that builds up during storms. See related question about Check 21. AuthorityA government or public agency created to perform a single function or a restricted group of related activities. Voluntary bankruptcy-the debtor files a petition claiming inability to meet financial obligations and willingness to be declared bankrupt. See related questions about Mortgage Lenders & Servicers. AFMLSAsset Forfeiture and Money Laundering Section, U.S. Department of Justice. Audited statementsThe most reliable type of financial statements. See related questions about Mortgages & Home Equity and Personal & Auto Loans. If a firm has a material amount of inventory, the auditor will typically perform a physical verification of that inventory. Budget, the. Account analysisAn analysis performed to determine the profitability of each demand account to the bank. See related questions about UGMA. A machine the enables bank customers to perform basic transactions, such as deposits and withdrawals, anytime and often anywhere. The federal securities laws generally require entities that pool securities to register those pooled vehicles (such as mutual funds) with the SEC. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Glossary of investment terms. See related questions about Right of Offset. A billing error can also be caused by a creditor's failure to credit a payment or other credit to an account as well as accounting and clerical errors. A set of statutes enacted by the various States to provide consistency among the States' commercial laws. Used to indicate that a certain amount of a customer's balance may not be withdrawn until an item has been collected, or until a specific check or debit is posted. Generally, there are significant penalties for early withdrawal. The interest rate may change over the life of the loan as market conditions change. The central bank of the United States. A bank is a financial institution licensed to receive deposits and make loans. RESPA also limits the amount of funds held in escrow for real estate taxes and insurance. The banking industry uses a number of technical terms, and it is often – wrongly – assumed that everyone knows what these mean. See special purpose vehicle and waterfall. Substitute checks were created under Check 21, the Check Clearing for the 21st Century Act, which became effective on October 28, 2004. For example, an analysis of the reduction in savings account balances caused by withdrawals over time. Creditors typically hire a collection agency only after they have made efforts to collect the debt themselves, usually through letters and telephone calls. Writing a check in an amount that will overdraw the account but making up the deficiency by depositing another check on another bank. A fund operated by an investment company that raises money from shareholders and invests it in stocks, bonds, options, commodities, or money market securities. Is the capitalization rate appropriate? Advance formulaA provision sometimes used in lines of credit as a sublimit on the maximum amount that can be borrowed. See related questions about Trusts. A book in ledger form in which are recorded all deposits, withdrawals, and earnings of a customer's savings account. Investors subject to AMT lose the benefits of the tax exemption for interest paid on otherwise tax-exempt securities. The term does not include recreational vehicles. As of February 27, 2010, the Federal Reserve consolidated its checking processing centers into one processing center. Under the Equal Credit Opportunity Act (ECOA), an oral or written request for an extension of credit that is made in accordance with the procedures established by a creditor for the type of credit requested. Most real estate and automobile loans are closed-end agreements. The process of reducing debt through regular installment payments of principal and interest that will result in the payoff of a loan at its maturity. See related questions about Inactive Accounts. Amortization periodFor financial instruments, the time from the inception of a loan or investment instrument with scheduled principal repayments to the due date of the final contractually obligated principal repayment. The schedule sets a standard time period since each check cannot be individually traced through the check-clearing process. Automated Teller Machine (ATM)A computer terminal for user initiated banking transactions. The benefits may be exempt from garnishment but you will have to alert the court or creditor. A transfer of funds from one point to another by wire or network such the Federal Reserve Wire Network (also known as FedWire).See related questions about Wire Transfers. A form to be completed by an applicant for a credit account, giving sufficient details (residence, employment, income, and existing debt) to allow the seller to establish the applicant's creditworthiness. The principal amount of loans is amortized by the periodic, usually monthly, payment of a fraction of the principal calculated to repay the entire amount of principal due by the date of the last scheduled periodic payment. A time deposit (also known as a term deposit) is a money deposit at a bank that cannot be withdrawn for a certain "term" or period of time. Here are basic Banking terms made easy for you to understand. All interest rates can be categorized as either fixed, administered, or floating. At its most basic, banking involves an institution holding money on behalf of customers that is payable to the customer on demand, either by appearing at the bank for a withdrawal or by writing a check to a third party. Check truncation eliminates the need to return canceled checks to customers. See related questions about Flood Insurance. They offer a variety of financial products and services. A deceased person, ordinarily used with respect to one who has died recently. (2) The name for a convention used to express the rate of prepayments for an asset-backed security. These include accepting deposits and loan payments, providing withdrawals, and transferring funds between accounts. The Fed, as it is commonly called, regulates the U.S. monetary and financial system. (Mutual funds are not covered by FDIC insurance). Under the Equal Credit Opportunity Act, a creditor's refusal to grant credit on the terms requested, termination of an existing account, or an unfavorable change in an existing account. A debit may be an account entry representing money you owe a lender or money that has been taken from your deposit account. Alternative minimum tax (AMT)A federal income tax applied to individuals and corporations that take advantage of tax benefits in amounts that are large relative to their incomes. Cut-off time - The time of day when a transaction can no longer be accepted for that trading day. 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