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Glossary of Banking Terms

Glossary of Banking Terms from Bank of America The Bank of America banking glossary helps you find the definitions to common banking terms. Find the answers you want in the glossary of banking terms.
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 transactions that occur on 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 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 internal or external account 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 (for example, a car loan payment or a mortgage payment).

Available balance

The amount of money in your account that is available for immediate use.

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 monthly maintenance fee applies or whether your account qualifies for special services or discounts. See minimum daily balance.

Banking center

A Bank of America branch office. There are thousands of Bank of America banking center locations.

Bill Pay

A service from Bank of America that lets you pay your bills online.

Bounced check

A check that is returned to the depositor because there are not sufficient funds to pay the amount of the check.

Canceled check

A check that has been paid. A canceled check is usually acceptable as legal proof of payment.

Cashed Item Returned Fee

see deposited item returned fee.

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 (CD)

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.

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 are sometimes interest-bearing accounts.

Check card

See Debit Card.

Check image

A service that provides images of canceled checks. Each account statement includes images of checks (up to 10 per page) that posted to the account during the statement cycle. You can view and print copies of the front and back of checks posted within the last 12 months by signing on to Online Banking. You can also request copies of checks by visiting your nearest Bank of America banking center, or by calling the customer service number on your statement. As it relates to Mobile Check Deposit, a check image is an image of the front and back of a check created within Bank of America’s Mobile Banking app using your mobile device. The images are subsequently transmitted for deposit.

Check safekeeping

A service where the bank keeps a copy or digital image of all checks written against your account for 7 years instead of returning them with the account statement. 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 financial center.

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 you have in all of your linked deposit accounts, such as savings, checking and CDs. For some checking accounts, the combined balance determines whether the monthly maintenance fee can be avoided.

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.


The increase in a deposit account balance that occurs when a deposit is made to the account. See also debit.

Credit card

A plastic card issued by a bank or other financial company for the purpose of purchasing goods and services using credit.  In most cases, a credit limit is established for each account.

Custodial account

An account created for the benefit of a minor (a person under the age of 18 or 21 depending on state law) with an adult as the account's custodian.


A decrease in a deposit account’s balance, such as occurs when a check posted to the account. See also credit.

Debit card

A plastic card that deducts money from a designated checking account to pay for goods or services. It can be used anywhere Visa® or MasterCard® debit cards are accepted and no interest is charged. A debit card can also be used at ATMs to withdraw cash.


Money added into a customer’s bank account.

Deposited Item Returned Fee (or Cashed Item Returned Fee)

A fee we charge each time a check or other item that we either cashed for you or accepted for deposit to your account is returned to us unpaid.

Digital wallet

You can use the credit and debit cards stored in your digital wallet to make purchases at participating merchants.
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Direct deposit

A service that automatically transfers recurring deposits into your checking or savings account. Deposits can include salary, pension, Social Security and Supplemental Security Income (SSI) benefits, or other regular monthly income.


Information pertaining to an account’s services, fees and regulatory requirements.

Electronic funds transfer (EFT)

Any transfer of funds initiated by electronic means from an electronic terminal, telephone, computer, ATM or magnetic tape.

Emergency cash

A service provided by Visa to Bank of America personal debit card customers. In the case of emergency (theft, etc.) replacement cash can be delivered to you directly or to a convenient location anywhere in the world, 24 hours a day, 365 days a year.

EMV/Chip Card

An EMV or chip card is a standard card that contains an embedded microchip as well as a traditional magnetic stripe. The chip encrypts information to increase data security when making transactions at terminals or ATMs that are chip-enabled.

Federal Deposit Insurance Corporation (FDIC)

The FDIC is an independent agency of the United States government that protects people who have funds on deposit with FDIC-insured banks and savings associations against the loss of their insured deposits if their bank or savings association fails. FDIC insurance is backed by the full faith and credit of the United States government. The FDIC guarantees deposit accounts (checking, savings, money market savings and CDs) up to applicable limits, which is $250,000 per depositor, per insured bank, for each account ownership category.


The time between the date when a check is deposited to an account and the date the funds become available.

Inactive account

A bank account in which there have not been any transactions (excluding direct deposit) for an extended period of time. In some cases, when there has been no activity in the account within a period specified by state law (generally at least 3 years), the law requires the bank to turn funds in the account over to the state as unclaimed property.

Interest-bearing account

An account that earns interest.

Interest rate

The percentage of interest paid on an interest-bearing account, such as savings, CDs and some checking accounts; also, the percentage charged on a loan or line of credit. Different types of accounts and loans pay or charge different rates of interest. See original interest rate.


An Individual Retirement Account (IRA) is an account that provides either a tax-deferred or tax-free way for you to save for retirement. There are many different types of IRAs but Roth, Traditional and Rollover IRAs are the most common. Within an IRA, some people invest in mutual funds or stocks, while others may choose bank products such as CDs and money market savings accounts. Each IRA has certain eligibility requirements and unique features.

Joint account

An account owned by 2 or more people.

Linked account

Any account linked to another account at the same financial institution so that funds can be transferred electronically between accounts. In some cases, the combined balance of all linked accounts may determine whether monthly maintenance and other fees are applied to the account.

Maturity date

The date that a CD term ends, the bank stops paying the agreed-upon interest and you can choose to take the money deposited or renew the term.

Minimum daily balance

The lowest end-of-day balance in an account during a statement cycle; a certain minimum daily balance is often required with interest-bearing accounts to avoid a monthly maintenance fee or qualify for special services. See average daily balance.

Mobile wallet

A mobile wallet, which is a type of digital wallet, stores your physical credit and debit cards in your mobile device as virtual cards, allowing you to make purchases at participating merchants.
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Money order

A financial instrument, issued by a bank or other institution, allowing the individual named on the order to receive a specified amount of cash on demand. Often used by people who do not have checking accounts.

Monthly maintenance fee

The fee charged to maintain a particular account, such as a checking or savings account. Bank of America offers many options to help avoid the monthly maintenance fees on checking and savings accounts.

Non-bank ATM

An ATM or cash machine that provides ATM cardholders with access to their accounts, but is owned and operated by an independent bank or financial institution. Fees generally apply to cash withdrawals at non-bank ATMs and they typically don’t accept deposits.

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

The interest rate assigned when a CD account is opened. The original interest rate is listed on your CD account receipt and statement.


An overdraft occurs when a bank makes a payment that has been requested (such as a check), even though there are not enough funds available in the account to cover it. This type of payment is known as an overdraft and the account is said to have been overdrawn. See also overdraft protection

Overdraft Item (or NSF: Returned Item)

An overdraft item is when you do not have enough available funds in your account to cover an item and we authorize and pay the item and overdraw your account. An NSF:Returned item is when we decline and return the item unpaid. See your Deposit Agreement and Disclosures and Personal Schedule of Fees for additional information.

Overdraft protection

Overdraft Protection links your eligible Bank of America checking account to another Bank of America account (such as savings, credit card, eligible second checking account or line of credit) and automatically transfers available funds to cover purchases and prevent returned checks and declined items when you don't have enough money in your checking account. You can apply for overdraft protection by visiting a financial center or calling 800.432.1000 (Mon.-Fri. 7 a.m.-10 p.m. ET or Sat.-Sun. 8 a.m.-5 p.m. ET).

Overdraft Protection Transfer Fee

An overdraft protection transfer fee occurs whenever funds must be transferred to cover a transaction that overdraws your eligible checking account. When a debit clears that exceeds the funds available in your eligible account, money will be transferred from the eligible linked Overdraft Protection account.

Overdraft Settings

The overdraft setting for your checking account determines how the bank handles your transactions when you don’t have enough money in your checking account or your eligible linked Overdraft Protection account at the time of the transaction. 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 for additional information.

Personal identification number (PIN)

The unique number you must use to access your account at an ATM or make a purchase with a debit card. Your PIN should always be kept confidential.


See interest rate.


Regulation E

Regulation E carries out the purposes of the Electronic Fund Transfer Act, which establishes the basic rights, liabilities and responsibilities of consumers who use electronic fund transfer services and of financial institutions that offer these services. The primary objective of the act and Regulation E is the protection of individual consumers engaging in electronic fund transfers.

Electronic fund transfer systems include automated teller machine transfers, telephone bill-payment services, point-of-sale (POS) terminal transfers in stores and preauthorized transfers from or to a consumer’s account (such as direct deposit and social security payments). The term “electronic fund transfer” (EFT) generally refers to a transaction initiated through an electronic terminal, telephone, computer or magnetic tape that instructs a financial institution to either credit or debit a consumer’s asset account.

Returned item

When you do not have enough available funds in your account to cover an item and we decline to pay and return the item unpaid, we will charge a NSF:Returned Item Fee for each returned item. View your Deposit Agreement and Disclosures and Personal Schedule of Fees for additional information.

Savings account

A deposit account that generally earns higher interest than a checking account and limits you to no more than a total of 6 automatic or preauthorized transfers, telephone transfers or payments (including check, draft and point-of-sale transactions, if checks or debit cards are allowed on the account) from a savings account each monthly statement cycle.

Simple interest

The interest calculated only on the principal funds that have been deposited in the account; no interest is earned on interest that has already been earned on the principal.

Standard Setting

The Standard Overdraft Setting is automatically applied to new consumer accounts (excluding SafeBalance Banking® accounts, which are automatically set to the Decline All setting).

With the Standard Setting:

ATM withdrawals and everyday, non-recurring debit card transactions (individual debit card purchases such as at the grocery store or a one-time online purchase), will only be authorized when we determine you have enough available funds in your eligible account or in your eligible linked Overdraft Protection account at the time of the transaction. Otherwise, we typically decline the transaction and we do not charge an Overdraft Item fee.

For other types of transactions, such as checks, Bill Pay and other electronic payments, as well as recurring debit card payments we may pay transactions when you don't have enough available funds in your checking account or linked Overdraft Protection account at the time of the transaction.

If we pay a transaction that's larger than your available balance and it overdraws your account, this typically results in a charge for each overdraft item, unless you deposit enough available funds that day to cover the overdraft.

If we return the item unpaid, this typically results in a NSF: Returned item fee.

Stop payment

A request that the bank not pay a check or payment you have written or authorized. Stop-payment orders are generally placed for checks that have been lost or stolen, or in situations where a purchase is disputed. Stop payment orders generally expire after 6 months and a fee is usually charged for this service.

Time deposit

An agreement to deposit a stated amount in the bank for a fixed length of time during which a fixed rate of interest will be paid (unless disclosed as a variable rate). Penalties are typically assessed if the funds are withdrawn before the end of the agreed-upon period. See certificate of deposit.

Transaction limitations

Refers to a Federal Reserve Board regulation that limits certain types of withdrawals and/or transfers you can make from your savings and/or money market deposit accounts. With such accounts, no more than 6 preauthorized or automatic transfers (including check, draft and point-of-sale transactions, if checks or debit cards are allowed on the account) or telephone/PC transfers (including bill payments) may be made each month. While an unlimited number of withdrawals may be made at ATMs and teller windows, fees may apply. Please view your Deposit Agreement and Disclosures and Personal Schedule of Fees for additional information.


The movement of funds from one account to another.

Travelers cheque/travelers check

Check issued by a financial institution that functions as cash but is protected against loss or theft. Useful when traveling.

Uncollected funds

Items deposited in an account that have not yet been collected by the bank on which they were drawn.

Variable rate

An interest rate that may fluctuate during the term of a loan, line of credit or deposit account. Rates may adjust due to changes in an index rate (such as the prime rate); in some situations, the bank may set its own rate.

Virtual card

A virtual card is the digital form of your physical credit card and has a unique card number that's stored within a digital wallet.
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Wire transfer

An electronic payment service for transferring funds (for example, through the Federal Reserve Wire Network or the Clearing House Interbank Payments System).


The removal of funds from an account.

Zero Liability Protection

If your credit or debit card is lost or stolen, and you report the loss promptly, you may not be responsible for fraudulent purchases made with your card. There is no charge for the Zero Liability Protection program and it is available on all Bank of America consumer credit cards, debit cards, and Home Equity line of credit access cards.

Claims may only be filed against posted and settled transactions subject to dollar limits and subsequent verification, including providing all requested information supporting fraudulent use claim. For debit card transactions, claims must be reported within 60 days of the statement.