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Banking Terms Glossary

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Accrued Interest
For deposit accounts, it is the interest that is earned but not yet credited to the account. For loans, interest that is calculating daily on the loan’s principal balance, adding to the amount owed.

Adjustable-Rate Loan/Floating-Rate Loan
A loan where the interest rate is adjusted periodically based on an index. An ARM loan is one type of adjustable-rate loan.

Advance or Draw
Funds that are borrowed on a line of credit.

Annual Percentage Rate (APR)
The cost of credit is expressed as a yearly rate including interest and other finance charges. This allows the buyer to compare loans; however, APR should not be confused with the actual note rate.

Annual Percentage Yield (APY)
The annual yield earned on a deposit account, such as a savings, money market or CD account. Savers can use APY as one of several factors to help determine which savings options are the best.

The expert estimation of the fair market value of a property; also referred to as appraised value.

ARM (including 5/1 ARM and 7/1 ARM)
An Adjustable-Rate Mortgage that is consumer purpose, closed-end, with a term greater than one year in which the interest rate and payment can change. In a 5/1 ARM, the interest rate stays fixed for the first five years and then changes every one year after that. The interest rate is determined by adding a margin to the index rate. To learn more about ARM loans, ask us for our CHARM Booklet and ARM Program Disclosures.

Automated Clearing House (ACH)
A type of electronic funds transfer system that operates between banks, businesses, and individual consumers in a nationwide network. Banks use ACH payments to move money between them. When you sign up for direct deposit of your paycheck at work, that money often moves into your bank account via ACH.

Automated Teller Machine (ATM)
A convenient location for basic banking transactions, such as withdrawing cash, depositing checks or making balance inquiries.

Available Balance
The amount of money you have in your bank account that is available to spend or withdraw. If you have recently deposited a check, made debit card purchases, or written checks, those transactions may still be marked as pending and may not be included in or deducted from your available balance.

Balloon Loan
A loan that does not fully amortize (gradually payoff) over its term, leaving a balloon payment due at maturity.

Balloon Payment
A large payment of principal plus accrued interest due at the end of a balloon loan.

Business Online Banking (BOLB)
A service that allows a business account holder to obtain account information and manage certain banking transactions through a personal computer or mobile device via the financial institution’s website on the internet. (This is also known as internet or electronic banking.)

Cash Concentration and Disbursement (CCD Payments)
A type of electronic funds transfer typically used to transfer funds for commercial business deposit accounts. Funds can be consolidated from various locations and so-called concentrated into a single collection account.

Certificate of Deposit (CD)
A type of savings that pays a set interest rate on the deposited money for a set period of time.

Deposited item returned to the bank that accepted the item.

One or more persons who have signed the note and are equally responsible for repaying the loan.

Property or other assets that you agree to give to a bank if you fail to pay back money that you have borrowed.

Collected Funds
Cash deposits or checks that have been presented for payment and for which payment has been received.

Current Balance
The amount of money in an account at the start of the business day, including all deposits and withdrawals posted the previous night, whether the funds have been collected.

Debit Card (DBT CRD)
A debit card allows the account owner to access their funds electronically. Debit cards may be used to obtain cash from automated teller machines or purchase goods or services using point-of-sale systems. Debit card transactions may take several days to actually settle to the deposit account to which it is linked.

Demand Deposit Account (DDA)
An account with deposits that can be withdrawn without prior notice. Savings accounts, money market accounts, and CDs are not DDAs because the bank reserves the right to require 7 days’ notice for withdrawals (although that right is seldom exercised).

Deposit Account
An account with deposits that can be withdrawn. Common examples include a savings account, checking accounts, and money market accounts.

Dormant Account
Accounts that have been inactive at least 12 months and for which we have had no contact with the customer.

Electronic Funds Transfer (ETF)
A method of transferring funds between banks, businesses, or individual people.

This transfers ownership from the person who wrote the check to the payee and allows the bank to settle the funds associated with the check.

A legal arrangement in which a third party manages the documents and funds until a sales agreement has been finalized and fulfilled (or “closed”) between two parties. Escrow also refers to an account where a homeowner deposits funds for future taxes and/or insurance payments that is usually held by a lender or loan servicer.

Escrow Analysis
The periodic examination of escrow accounts to verify that monthly deposits are sufficient to pay taxes, insurance, and other escrow-related items on when due. BankSouth performs this yearly on the anniversary month of the original loan date.

The process of a bank or lender taking possession of a mortgaged property after the borrower defaults on the loan payments.

Fully Amortized Loan
A loan that is fully repaid in substantially equal payments through the maturity date of the loan.

Grace Period
A specific number of days set by the bank that allows the account holder time to decide if they would like to renew or close their CD with no penalty. Also, the specific number of days after the due date of a loan payment before a late payment fee will be assessed.

Promises to pay a borrower’s debt if the borrower defaults. The guarantor is not responsible for repaying the debt unless the borrower fails to make their payments and the loan is at risk of default.

Used to indicate that a certain amount of a customer’s deposit balance may not be withdrawn until an item has been collected, or until a specific check or debit is posted.

Individual Retirement Account (IRA)
A retirement savings program for individuals to which yearly tax-deductible contributions up to a specified limit can be made. The amount contributed is not taxed until withdrawn. Withdrawal is not permitted without penalty until the individual reaches age 59 ½. BankSouth offers Traditional IRAs, Roth IRAs, and SEP IRAs.

Input Message Accountability Data (IMAD)
Is a unique number the Federal Reserve assigns to BankSouth once a wire is initiated. It can be used to investigate and track wire transfers.

The fee charged for borrowing money or money that you receive when you keep money in a bank account.

Interest Paid LTD
The amount of interest you have paid over the life of the loan.

Interest Paid Prior Year
The amount of interest paid last year.

Interest Paid YTD
The amount of interest you have paid since the beginning of the year.

Late Fee
A charge imposed on a consumer who fails to make a loan payment by the due date.

Loan Fees
Fees a lender charges a consumer for processing a loan.

Loan Payoff
How much you will have to pay to satisfy the terms of your loan and completely payoff your debt. This amount may include accrued interest not yet billed. BankSouth’s Loan Servicing provides this information to BankSouth customers.


Maturity Date
This is the date of expiration for the contractual obligation of a financial instrument. For example, certificates of deposit have a maturity date that depends on the length of the CD term. When the CD matures, you have the option to withdraw the money. Some banks and credit unions also allow you to roll it into a new CD or enable the CD to renew automatically. On a bank loan, this refers to the date on which the principal balance of a loan becomes due and payable.

Monetary Instrument
Products provided by banks. These include cashiers’ checks, money orders, and travelers checks.

A legal agreement where a bank or lender is pledged real estate property (home or a building) as security for repayment of the money that is borrowed to purchase the real estate.

Mortgagee Clause
Is a separate agreement between the mortgage lender (the mortgagee) and the insurance company that is insuring your property. A mortgagee clause ensures that if your property is damaged while you are paying off the mortgage, the insurance company will ensure your mortgage lender is involved with using insurance funds to repair damage to the property.

Non-Revolving Line of Credit
The customer can borrow/draw funds one time and pay funds back, but they cannot reborrow. These lines of credit are also referred to as Straight Lines of Credit and Draw Lines. Typically used for construction loans.

Non-Sufficient Funds (NSF)
This refers to when an account does not have sufficient funds to cover a transaction.

Checks drawn from a different bank.

Online Banking (OLB)
A system that allows you to communicate via computer or mobile device with your bank on the internet. (This is also known as internet or electronic banking.)

OnUs Check
Checks drawn on this bank by its customers.

When the amount of money withdrawn from a bank account is greater than the amount available in the account, the excess is known as an overdraft, and the account is said to be overdrawn.

Payable on Death (POD)
A Payable on Death (POD) beneficiary is an individual, group of individuals, non-profit, company, organization, or trust, other than the owner or co-owner, designated by the owner(s) of the account to receive the balance of funds when the last owner on the account passes away.

Positive Pay
For business accounts, positive pay helps eliminate fraud for business accounts. It allows you to match up checks you’ve written to those that are clearing your account. Then, positive pay gives you the option to pay the check or return it as another level of security and money management. This service generally comes with a fee.

Payment Penalty
A penalty imposed on a borrower for repaying the loan before its due date. (In the case of a mortgage, this applies when there is not a prepayment clause in the mortgage note to offset the penalty).

A sum of money that is left to pay on a loan. This amount does not include interest, fees, or other charges.

Proof of Deposit (POD — Deposits)
Verification of the dollar amount on a check or draft being deposited. This is done by comparing the handwritten amount on the check to the amount written on the accompanying deposit slip. Proof of deposit is the second step in processing of checks presented for payment, after checks have been separated by a check sorting machine known as a reader/sorter into on-us and on-other categories and is the only step in check processing that has not been automated fully. Proof of deposit or proving a check is done manually after checks have been sorted into different categories and the MICR line containing the customer’s account number and the bank routing and transit number has been captured by the reader/sorter.

Revolving Line of Credit
Allows a customer to borrow funds up to an approved limit, pay the funds back and reborrow until maturity or specified date.

Right of Recission (ROR)
Right to cancel, within three business days, a contract that uses the primary residence of a person as collateral, except in the case of a loan to purchase the home. The right of rescission is guaranteed by the Truth in Lending Act (TILA).

Right of Set-Off
Banks’ legal right to use funds that a guarantor or debtor may have on deposit to cover a loan in default or another overdrawn account. It is also known as the right of offset.

Routing Number
A nine-digit numerical code that identifies your bank and allows for checks to be processed. BankSouth’s routing number is 061112364.

Safe Deposit Box Rental Payment (SDB PMT)
Automatic payment deducted for annual safe deposit box rental. Notated as “Safe Deposit Rental Payment” on BankSouth account statements.

Stale Dated Check
A check with a date over six months old. Banks generally will not cash or honor stale dated checks.

Standby Letter of Credit (SBLC)
Is a guarantee that is made by a bank on behalf of a client, which ensures payment will be made even if their client cannot fulfill the payment. It is generally used in business trade transactions.

Stop Payment
A formal request to a financial institution to cancel a check or payment that has not yet been processed. Verbal stop payment requests are effective for 14 days. A stop payment request confirmed in writing is effective for six months, after which the check becomes a stale dated check.

Wire Transfer
A transfer of funds from one point to another by wire or network such the Federal Reserve Wire Network (also known as FedWire). Wire transactions generally settle in a matter of hours.

Wire Callback
Wire desk calls customer to confirm and record required wire request over the phone.