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Banking & Savings Terms

Financial terms related to bank accounts, savings, interest rates, and basic banking.

Annual Percentage Rate (APR)

The yearly cost of borrowing expressed as a percentage, including interest and fees.

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Annual Percentage Yield (APY)

The effective annual return on savings or investments accounting for compound interest.

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Asset

Anything of economic value owned by an individual or organization.

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Balance Sheet

A financial statement showing assets, liabilities, and net worth at a specific point in time.

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Balloon Payment

A large lump-sum payment due at the end of a loan term.

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Beneficiary

A person designated to receive assets from an account, trust, or insurance policy.

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Certificate of Deposit (CD)

A savings account with a fixed term and fixed interest rate, higher than regular savings.

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Collateral

An asset pledged as security for a loan; forfeited if the borrower defaults.

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Currency Exchange Rate

The rate at which one currency can be exchanged for another in foreign exchange markets.

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Current Assets

Assets expected to be converted to cash within one year.

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Equity

The value of ownership in an asset minus any debt owed against it.

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Federal Funds Rate

The interest rate at which banks lend to each other overnight; set by the Federal Reserve.

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Forex (Foreign Exchange)

The global market where currencies are traded against each other.

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High-Yield Savings Account

A savings account offering significantly higher interest rates than traditional banks.

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Health Savings Account (HSA)

A tax-advantaged account for medical expenses, available with high-deductible health plans.

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Interest Rate

The cost of borrowing money or the return on savings, expressed as a percentage.

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Joint Account

A bank or investment account shared by two or more people, each with full access.

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Liability

A financial obligation or debt owed to another party.

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Liquidity

How quickly and easily an asset can be converted to cash without losing value.

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Principal

The original amount of money borrowed or invested, before interest.

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Savings Account

A bank account for storing money with interest, FDIC-insured and easily accessible.

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Simple Interest

Interest calculated only on the principal, not on accumulated interest.

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Account Reconciliation

The process of matching your records with the bank's records to ensure accuracy.

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Basis Point

One one-hundredth of a percent (0.01%); used to express small percentage changes.

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Beneficiary Designation

The legal document naming who receives assets from an account upon your death.

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CD Rate

The interest rate offered on a Certificate of Deposit over its term.

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Direct Deposit

Automatic transfer of your paycheck or benefit payments directly to your bank account.

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