10 Essential Checking Account Terms
To take control of your checking account you need to learn the lingo. Debts has selected the 10 most common checking account terms so you can tell your money market from your lifeline account.
1. ATM (Automatic Teller Machine) surcharge
This is a fee incurred for using the ATM at a bank where you are not an account holder. For example, if you have an account with Bank 1 but withdraw cash from Bank 2’s ATM, you could be paying a surcharge.
To avoid unnecessary costs, ensure you understand what your bank charges whenever you use another bank’s ATM. You may have to pay a surcharge to ‘Bank USA’ plus a non-bank owned ATM charge to ‘Bank America’. More....
2. Debit card
A debit card can be used for all sorts of reasons, from grocery shopping and paying bills to major purchases like a car. A debit card is linked directly to your bank, deducting the money from your account at time of purchase.
3. Electronic funds transfer
Like other terms you’ll find on this list, the title is pretty self-explanatory. An electronic funds transfer is the transfer of money between accounts using a consumer electronic system.
One of the most common reasons you may use an electronics funds transfer is to pay bills.
4. Interest checking account
An interest checking account, otherwise known as a ‘liquid account’ usually provides Federal Deposit Insurance Corporation (FDIC) insurance to $100,000 per person. An interest checking account permits unlimited check writing and pays interest.
5. Lifeline account
This is very basic account usually reserved for customers on a low-income. Lifeline accounts are typically checking and savings facilities that do not incur monthly fees or require a minimum balance. Also, it is common for lifeline accounts to put a restriction on check transactions.
6. Money market account
This type of bank account restricts certain types of withdrawals and earns interest on a par with many money market funds.
A money market account is basically a premium account, or a high interest savings account.
7. Negotiable Order of Withdrawal account
This form of liquid account provides FDIC insurance to $100,000 per person and enables unlimited check writing. This account also known as a ‘now account’ also earns you interest.
8. Overdraft
An overdraft is like a safety net for people who run precariously close to exceeding their balance when writing checks. If you have an overdraft of $1,000 on your account your balance may read $100 but you actually have $1,100 at your disposal.
9. Returned or ‘bounced’ check charge
This charge can also be referred to as an NSF (non-sufficient funds fee) and is never cheap. Whenever you write a check that is not backed up with sufficient money, it will be returned unpaid. Aside from potential embarrassment, a returned check can incur high fees.
10. Service charge
You can expect to incur a service charge for any number of banking services. Your bank may charge you for transferring money abroad for example, or for using an overdraft.
Service charges vary depending on the bank so it is worthwhile finding out how much a bank charges for a service you are likely to rely on.
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