Here’s What Those Banking Terms You’ve Always Smile-Nodded About Actually Mean

Yes, I see you, person who talks to the banks and nods along with no expression on your face as you pretend to understand what they’re talking about. And like, same, so no judgment. But today is the day, the day we become more responsible and learn the meaning of those common banking terms we never thought to Google because we kind of feel like we should already know it.

Accrued Interest

This is interest that has been accumulated on a bond or loan. It’s often paid in set intervals.

Arrears

Unpaid interest or dividends that a corporation owes its stock/ bondholders but failed to pay by the due date.

Bond

Kind of like shares, except interest is paid to the bondholder at set intervals, so more like a loan in that respect.

Broker

A third party who brings buyers and seller together, usually for a commission.

Chequing Account

Or more accurately, Cheque VS Savings account. A Chequing account is generally designed for more everyday use, while a Savings account is designed to hold money you don’t touch to, well, save.

Compound interest

This is basically the result if you re-invest any interest earnt rather than paying it out. Once that happens, the next period will earn interest on the original sum of money plus the re-invested interest.

Dividends

Part of a company’s profits paid out to shareholders.

Foreclosure

The legal process of a lender trying to recover the balance of a loan in which the borrower has stopped paying, by forcing sales of the borrower’s assets.

Hedge Fund

An offshore investment fund, which is probably why I mostly hear about it on shows about rich Americans.

Overdraft

When you take more money out of a bank account than it actually holds, aka your balance goes below zero.

Net

The net amount is assets minus liabilities, ie. Your Net Worth is any money you have coming in minus any debts you owe, and Net Income is your total pay minus tax and other deductions.

Yield

The total return made from an investment each year.