Glossary of Financial Banking Terms from Bank of America

Account Balance: The amount of money in an account at the start of the business day, including all deposits and withdrawals posted the previous night, whether or not the funds have been collected. See collected balance.
Account Statement: A printed or online statement of all the funds paid out by or paid into your account during a statement cycle.
Active Account: An open bank account in which transactions can be made; usually an account that has had activity within the last 3 years.
Affinity debit card: A debit card issued in affiliation with a participating organization (for example, a charity or sports team). Affinity debit cards have all the same benefits as standard Bank of America debit cards and are available with eligible checking accounts.
Annual percentage yield (APY): The total amount of interest paid by the bank on your deposit account (checking, savings, CDs, IRAs) during the year. Includes both interest paid on the amount held in the account, as well as compounded interest for the year.
Automated Clearing House (ACH): A nationwide funds transfer network that enables participating financial institutions to electronically credit, debit and settle entries to bank accounts.
Automatic funds transfer: An arrangement that automatically moves funds from your account to another on a date you choose; for example, every payday.
Automatic payment: An arrangement that automatically deducts funds from your account (usually a checking account ) on the day you choose in order to pay a recurring bill (such as car, insurance, mortgage payments, etc.).
Available Balance: The amount of money in your account that is available to spend, withdraw or cover transactions. Your available balance is updated throughout the day based on your account's activity. Your available balance incorporates any holds on your account, such as holds for debit card transactions we've authorized, and deposit holds.

Keep in mind that there are a few things that are not included in your available balance such as checks you've written that we haven't received yet and upcoming automatic payments. You'll also want to account for transactions where the final amount may differ from the amount that was originally authorized, such as when a tip is added to a restaurant charge.

Please refer to the Deposit Agreement and Disclosures (PDF) for more details.
Average Daily Balance: The sum of all the daily account balances during an accounting period (usually a monthly statement cycle), divided by the number of days in the same period. May be used to determine whether a service charge applies or whether your account qualifies for special services or discounts. See minimum daily balance.

Canceled Check: A check that has been paid. A canceled check is usually acceptable as legal proof of payment.
Cashier's check: A check issued by a bank and paid from its funds. A cashier's check will not usually bounce because the amount it is written for is paid to the bank when it is issued, and the bank then assumes the obligation.
Certificate of Deposit: A time deposit that is payable at the end of a specified amount of time or term. CDs generally pay a fixed rate of interest and, depending on the market rate environment, can offer a higher interest rate than other types of deposit accounts. Terms can range from 7 days to 10 years. CDs are insured by the FDIC up to applicable limits. If early withdrawal from the CD prior to the end of the term is permitted, a penalty is usually assessed. See Federal Deposit Insurance Corporation.
Certified Check: A check for which the bank guarantees payment.
Check card: See Debit Card.
Check safekeeping: A service where the bank keeps copies or digital images of all checks written against your account for 7 years, instead of returning them with account statements. You can view photocopies of canceled checks posted within the last 12 months by signing in to Online Banking or visiting your nearest Bank of America banking center.
Checking Account: A type of deposit account that enables customers to deposit funds and withdraw available funds on demand, typically by writing a check or using a debit card. These accounts are sometimes interest-bearing.
Collected balance: The balance in a deposit account, not including items that have not yet been paid or collected. See Account balance.
Combined balance: The total funds in all of your linked accounts, such as savings, checking and CDs. For some checking accounts, the combined balance determines whether you may avoid the monthly fee.
Compound interest: Interest that is calculated on both the accumulated interest and the principal balance in the account. The more frequently interest is compounded, the higher the effective yield.
Credit: The increase in a deposit account balance that occurs when a deposit is made to the account. See also Debit Card.
Credit card: A plastic card issued to an individual that allows that person to use credit to purchase goods and services. A credit limit is established for each card holder.

Online Banking: A service that allows an account holder to obtain account information and manage certain banking transactions via personal computer or mobile device.
Original interest rate: Rate assigned when you open a CD account. The original interest rate is listed on your CD account receipt and statement.
Overdraft: An overdraft happens when you don't have enough money in your checking account to cover a payment or purchase, but we allow the payment or purchase to be made. When this happens a $10 overdraft fee is charged.

The decision to allow an account to overdraft is made at our discretion. If we decide to decline your transaction or return it unpaid, we won't charge a fee. However, you may be charged a fee by the payee.

Please refer to the Deposit Agreement and Disclosures (PDF) for more details.
Overdraft Settings: The overdraft setting for your checking account determines how the bank handles transactions that exceed your available balance.

The Standard overdraft setting is automatically applied to most checking accounts. With this setting ATM withdrawals and everyday debit card purchases will only be authorized if you have enough money in your account or linked backup account(s) at the time of the transaction. Other types of transactions such as checks and scheduled payments may be paid, causing an overdraft, and you may be charged an Overdraft Item Fee.

You can also choose the Decline All overdraft setting on some accounts. With this setting ATM withdrawals and everyday purchases will only be authorized if you have enough money in your account or linked backup account(s) at the time of the transaction. Other types of transactions such as checks or scheduled payments will be returned unpaid if you don't have enough money in your account. A payee could charge you a fee if your payment is returned.

We pay overdrafts at our discretion based on factors such as the purchase or withdrawal amount and your account history, which means we don't guarantee that we'll always authorize and pay any type of transaction. We typically don't pay overdrafts if your account isn't in good standing or you aren't making regular deposits. We reserve the right to require you to pay overdrafts immediately. See your Deposit Agreement and Disclosures (PDF) for additional information.
Overdraft protection: Balance Connect^® for overdraft protection is an optional service which allows you to link up to five eligible backup accounts and can help you avoid overdrafts and declined or returned items. When you do not have enough funds in your checking account to pay for an item, available funds are automatically transferred from the linked backup account(s) to cover your transactions. There are no transfer fees when you use Balance Connect^®. It's important to note that transfers from a linked credit card or HELOC may result in interest charges. Please see the Deposit Agreement and Disclosures (PDF) for more information about eligibility and how Balance Connect^® transfers work.

See your Deposit Agreement and Disclosures (PDF) and Personal Schedule of Fees (PDF) for additional information.

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Glossary of Banking Terms