| M&S Bank has compiled this list of common banking terms used to help you understand the common banking terminology that is used today. If you have any questions you may contact your local branch Personal Banker or email the online teller at teller@msbank.com.
ACH Processing (ACH - Automated Clearing House) - Processing that occurs between a nationwide network of financial institutions that send electronic messages, via telecommunications lines instead of paper (checks), to transfer money between two parties. The most common ACH transactions are direct deposit, pre-authorized debits, cash concentration, and corporate to corporate payments.
Automated Teller Machine (ATM) - A machine that allows the customer to perform some of the more common teller transactions, such as cash withdrawals, deposits, and transfers. ATMs are generally accessible 24 hours a day, 7 days a week.
Cashier's Check - A check drawn by a bank on itself, signed by the Cashier or other authorized bank officer and payable to a third party named by the customer. Cashier's Checks are universally accepted.
Certificate of Deposit (CD) - A type of deposit account with a fixed term (months until maturity) and a minimum initial deposit. Interest is earned at the current rate in effect for the term. Interest payments may be added back to the CD or payable by check or deposit to another M&S checking or savings account. Most CD's are automatically renewable at the end of a term for the current rate in effect at the time of renewal.
Check Safekeeping - The process of microfilming customer's paid checks. The microfilm is the official record of the transaction and is retained by the financial institution. Canceled checks are stored rather than being returned to the customer.
Check Card (Debit Card) - A plastic card with the Visa or MasterCard logo, designed to give a customer access to funds in his/her checking account to obtain cash, purchase goods and services, or transfer funds from one account to another. The cards are accepted around the world wherever you see the Visa or MasterCard logo.
Compound Interest - Interest that accrues when earnings for a specific period are added to principal; thus interest for the following period is computed on the principal plus accumulated interest.
Credit Cards - A plastic card that can be used by the holder to make purchases or obtain cash advances using a line of credit made available by the card-issuing financial institution.
Daily Compounding - A frequency of calculating interest whereby interest is added to the principal each day. Interest is then earned on the new balance.
Direct Deposit - A pre-authorized system in which customer's government benefits or other payments are automatically deposited to their checking or savings accounts. Some types of Direct Deposits are Social Security, SSI, VA benefits, annuities, pension benefits, payroll checks and dividend checks.
Education IRA - An investment tool created for the purpose of paying for the future cost of a child's post-secondary education. Contributions and their earnings are tax-free when withdrawn to pay for qualifying education expenses.
EFTPS - Electronic Federal Tax Payment System is a new way for taxpayers to pay federal taxes electronically from the convenience of office or home. EFTPS interfaces with the TT&L program and is designed to replace the Federal Tax Deposit coupons with the electronic system. EFTPS offers two primary payment methods through the ACH network, and the taxpayer is in full control of initiating all tax payments.
Grace Period - A time period within which a depositor can withdraw funds from a certificate without penalty.
Individual Retirement Accounts - Two types to choose from for eligible individuals, the Traditional IRA and the Roth IRA.
IOTA Accounts - Interest on Trust Accounts are NOW accounts established by attorneys or law firms for their clients, where the interest is forwarded to the Florida Bar Foundation.
Money Market Deposit Account - A deposit account offered by financial institutions that is designed to be directly equivalent to, and competitive with, money market mutual funds. These accounts, unlike mutual funds, are FDIC insured.
NOW Account - A deposit account, similar to a checking account, from which the account holder can withdraw funds by writing a negotiable order of withdrawal (NOW) payable to a third party and which can earn interest.
Online Banking & Bill Pay - Personal and business account information accessible through a personal computer, the Internet or Screen Phone. The Bill Pay service, available via these same devices or a touch-tone phone, utilize the ATM network to electronically pay any bill (excluding the federal government and IRS). Paper checks are issued when ACH payments are not available.
Overdraft Protection - A service that allows the customer to write checks for an amount over and above the amount in their checking account. Funds are transferred from their line of credit or other designated account to their checking account as needed.
Personal Identification Number (PIN) or Personal Access Number (PAN) - A secret number or code used by the account holder to authorize a transaction or obtain information regarding his or her account. Often used in conjunction with a plastic card or with a telephone voice response system.
Qualified Retirement Plan - An employee benefit plan that qualifies for special tax treatment under Internal Revenue Code Section 401(a).
Regular Savings Account - A form of deposit account with no legal limits or requirements as to amount, duration, or times of additions or withdrawals.
Rollover IRA - A type of IRA that allows employees who receive a lump-sum distribution upon leaving an employer, or upon termination of an employer's qualified retirement plan, to deposit all or any portion of the funds in a self-directed IRA. The portion of eligible distribution that is put into such an account enjoys the same tax-deferral status as a regular IRA.
Roth IRA - Contributions are not deductible but distributions can generally be withdrawn tax-free.
Signature Card - A contractual form, executed by an account holder, establishing account ownership and setting forth some of the basic terms of the account and provisions of the deposit contract.
Simple IRA - Savings Incentive Match Plan for Employees of small employers. This retirement plan is simple to administer and offers contribution options that are both flexible and substantial; generally available to both for-profit and not-for-profit employers having no more than 100 employees.
Simplified Employee Pension Plan - A plan by an employer to make contributions toward an employee's retirement income. The employer makes contributions, up to the annual contribution limits, directly to an IRA set up by an employee with a qualified financial institution.
Tax Identification Number (TIN) - The number used to identify an individual or entity for federal income tax purposes.
Tiered Interest Rate - An interest rate structure in which the entire account balance earns a higher rate once it reaches the designated level, or interest is earned at various rates within tiers. The method used must be disclosed.
Traditional IRA - Contributions may be partially or fully deductible, but distributions are generally taxable.
Trustee Transfer - The moving of IRA funds from one IRA trustee directly to another IRA trustee, with no check being made payable to the IRA participant. This type of transfer is not subject to any time or frequency restrictions.
Uncollected Funds - Funds that have been deposited in an account or cashed against an account by a check that has not yet been cleared through the check collection process and paid by the drawee bank. Financial Institutions typically place a temporary hold on their customers' uncollected funds, making those funds unavailable for withdrawal until the time period of the hold expires.
Uniform Transfer to Minors Act - An act that sets forth provisions for giving a minor an intangible gift (i.e.- bank accounts, stocks or bonds) that results in income shifting with an adult serving as custodian. The custodian has direct control over the gift and can sell and reinvest proceeds from the gift for the minor recognizing any gain and/or annual income that results.
Wire Transfer - An electronic transfer of funds from one financial institution to another.
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