How to Talk Like a Money Ninja
If you want to advance to the next level of your ninja status, you need to learn the lingo.
Glossary of Terms
Saving and Spending
ACH (Automated Clearing House) Network – This is an electronic funds-transfer system that works with over 10,000 financial institutions. The system essentially moves money for people from one bank account to another. The transfers include direct deposits made by employers for payroll, consumer payments (online bill pay) and government tax refunds.
APY (Annual Percentage Yield) - This is the amount of interest you will earn by keeping money in an account for a year, assuming you do not add or remove funds. The compound interest is factored in.
CD (Certificate of Deposit) – This is a deposit product that pays higher interest rates for a set number of months or years, which is referred to as the term. In return for earning more, you do not have immediate access to your money. Generally, there is a penalty for withdrawing money from the CD before the end of the term. The penalty is usually equal to the interest earned for several months. It’s a good savings option for any money you know you won’t need for several months or years.
Checking or Spending Account – This is where the money you need for everyday expenses is kept. Funds in this account can be accessed by your debit card and can be moved electronically with apps, such as eBanking or Venmo. At Ardent, your spending account is called the Cash Account. Sometimes these accounts are referred to as checking accounts. There is no limit to the number of transactions you can make.
Compound Interest – The money you save earns interest. That interest gets deposited and added to your balance. The next month you earn interest on your balance, which includes the interest you earned the previous month. In other words, you earn interest on your interest, which is why small dollar amounts can become big dollar amounts over time.
NCUA (National Credit Union Administration) – The NCUA is a federal agency that has been around since 1970. They oversee all federally insured credit unions, which is why you’ll see “Federally insured by NCUA” on credit union materials. This means deposits up to $250,000 will remain safe at a federally insured credit union like Ardent.
Remote Deposit – This is the ability to deposit checks into your account using your mobile phone. An image is captured on your phone and transmitted to the credit union. A link to remote deposit is available inside the Ardent eBanking mobile app.
Savings Account – This is the account where you set your money aside for short-term goals, like a new gaming system or a new outfit, and long-term goals, like college or a new car. Funds in a savings account earn interest that is deposited monthly. Think of this account like a resort for your money, since the funds in it get to just lay around and be treated well. At Ardent, your savings account is called the Stash Account or the Rookie Account. Generally, you can withdraw money from this account at any time. However, there are federal regulations that limit withdrawals not done in person to only six per month. There can be a fee for more than six withdrawals.
Signature transaction – This is when your signature is required at checkout when you pay with your debit card in person. When your signature is required, a 4-digit code is not needed to complete the purchase. Your signature transactions may earn you Visa® rewards points.
APR (Annual Percentage Rate) – This is the amount of interest you will pay on a loan during the year. It includes the interest rate and other loan fees or costs. The APR is helpful when comparing rates at financial institutions.
Credit Report – This is like a report card for your finances. The report shows personal information (e.g. name, age, address, social security number), money you owe (credit cards, school loans, car loans, etc.), requests made by institutions for your financial profile and public information, such as bankruptcies and civil judgements. If you are late making a payment, it will negatively impact your credit score and be recorded on your report by the lender, which can be seen by other institutions.
Credit Score – This number is used by financial institutions and other companies to determine your worthiness as a borrower. Much like a college uses your SAT score in their admissions decision, lenders will heavily consider your score when looking at your application, whether it be for a credit card, a car or a house. Scores fall between 300 and 850. A person with a score of 720 or more is generally considered to be a lower risk, which is a good thing. Individuals with higher credit scores often pay lower interest rates on the money they borrow. Your payment history and credit usage make up about 65 percent of your credit score, which is why you should pay on time and not use all of your available credit.
Interest – The amount a financial institution charges for the use of the money it lends.
ATM (Automated Teller Machine) – It is a machine that enables you to do simple banking transactions, such as withdraw cash, transfer money and check a balance. In some instances, you may be able to deposit cash or checks into the machine.
eBanking (electronic banking) – Also known as Online Banking, it offers easy access to your accounts via the internet browser on a computer and a free app on mobile devices. Within eBanking members can deposit funds, transfer money, pay bills and check their account balances.
PIN (Personal Identification Number) – A 4- to 6-digit numerical code that completes ATM transactions and some electronic purchases with a debit card. This code should never be shared with anyone, not even your best friend and never write this number on the back of your debit card.
Routing Number – This 9-digit number identifies your financial institution (credit union or bank), much like a social security number identifies you. You’ll need the routing number to move money electronically between financial institutions. Most financial institutions make their routing number available on their website. (It’s at the top and bottom of every page at ardentcu.org.) This number also appears on the bottom of checks.