Important Banking Terms You Need To Know
When we open a checking account for the first time, it’s a brand new world. If we haven’t been exposed to it growing up, we probably have a very extensive knowledge of important banking terms such as, “Mom, we have checks-buy it!” I know when I was growing up that’s about all I knew of it 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.
One important aspect of filling out any credit card application is that of making note of the Annual Percentage Rate, normally referred to in print as the APR. What this means is the amount of interest that will be applied to your credit balance during the year. If you have a good credit history, then yours will be lower than people whose credit score is not as high.
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.
Important banking terms will always be around, and it’s up to you to know the basics. At least with that much information, it will give you a jumping off point to learn more about various areas of finance, or just be smart about your checking account. Check the details, make sure you’re well informed, and then work with your bank to get the most for your money, in accordance with their policies.
To understand how the banks in Canada function first you have to learn more about banking in Canada.
