GLOSSARY of Banking Terms: Earn, Save, Give, Spend & General Financial Terms
Use this glossary of terms as a reference.
Direct deposit—the electronic transfer of money from one bank account to another.
- Income—money received in a given period as wages, interest, etc.
- Income tax—tax paid on personal income such as salary or investment income; regulated and collected by governments.
- Net income—the amount of money an individual takes home after deductions (which include income tax, CPP and EI).
- Profit—financial gain, the sum remaining after the deduction of expenses. See also Net income.
- Revenue—income made from sales or earned on investments or, as with government revenue, from taxes. Revenue is the money made before expenses are subtracted, in contrast to net income.
- Balance—the amount of money held in a bank or investment account at a given moment.
- Bank—a financial institution that takes deposits and lends money.
- Bonds—a loan made to a government or business, maturing on a specified date for the face amount plus interest. A form of investment for those who purchase them.
- Canada Savings Bond—a bond issued by the Canadian federal government. Canada savings bonds offer secure investment with competitive interest rates. See also Bonds.
- Compound interest—interest earned on the principal amount plus the interest that has already accumulated. In other words, the interest earned on top of interest.
- Emergency fund—money set aside for unexpected expenses.
- Interest—the cost of borrowed money. The price that lenders charge borrowers for the use of the lender’s money. For example, you pay interest when you borrow money and you earn interest when you save money in a savings account. There is simple interest and compound interest.
- Interest rate—the interest payable on a debt expressed as a percentage of the debt over a period of time (usually a year). (E.g. the amount a financial institution charges for the money it lends or pays for the money on deposit.)
- Investment—the use of capital to create more money, either by producing income (interest, dividends, rent) or by increasing in value (capital gain).
- Principal—the amount of money or capital you begin with, for example, the face amount of a bond.
- Retirement savings—money that is put aside and invested to be used specifically to live on in retirement.
- Savings—money put aside to be used at a future time. It can also be thought of as deferred spending.
- Simple interest—interest calculated on principal alone.
- Stocks—an investment representing partial ownership (a “share”) in a company.
- Charitable donations—a gift or contribution to a non-profit organization, charity or private foundation. Donations are tax deductible if the charitable organization is registered with the Canada Revenue Agency.
- Fundraising—collecting money for a cause, organization, non-profit, etc., usually in exchange for a good or service, (e.g., cookie, lemonade, car wash, etc.).
- Not-for-profit/non-profit—An organization that raises money to pursue its objectives. Not-for-profits/non-profits rely heavily on charitable donations to operate. Registered charities are exempt from paying government taxes.
- Borrowing—obtaining money which must be repaid over a specified time and with specified interest.
- Chequing account—a type of bank account. The money in a chequing account can be accessed or spent with a cheque, a certificate that promises money to the receiver or the specified party on the “pay to the order of” line.
- Consumer—a person who buys goods or services to meet needs and wants.
- Credit card—a card most commonly issued by a bank or store that allows you to buy now and pay later. The cards terms include a minimum payment and interest rate.
- Debit card—an electronic card issued by a bank and connected to a personal bank account. The card allows the individual to access money in their account by electronically making purchases of goods and services or removing cash at an Automated Teller Machine (ATM).
- Debt—an amount of money owed to another.
- Discount—a reduction from a usual or list price.
- Expenses—outflows of money, for example, the financial costs of living include shelter, food, clothing, etc.
- Fees—charges for services. (I.e. bank fees are an expense for access to the bank’s services.)
- Loan—money given to a borrower on the promise of repayment, often with interest. See also Liability, Debt.
- Mortgage—a loan secured to buy real estate.
- Sales tax—calculated as a percentage of the cost of an item or service, set by the government and collected on behalf of the government.
- Taxes—a compulsory payment of a percentage of income, property value, or purchases etc. for the support of the government.
GENERAL FINANCIAL TERMS
- Appreciation—rise in value or price over time.
- Asset—anything owned that has value, for example, a house or investments.
- Bank book or pass book—a small book that an account holder keeps where a financial institution records the amounts of money deposited and withdrawn from the account. (usually tracked online now)
- Bank machine—an electronic machine that allows users to perform banking transactions such as cash withdrawals, deposits, bill payments and more by inserting a unique, encoded debit card. Also called Automatic Bank Machine (ABM) or Automated Teller Machine (ATM).
- Banknote—a piece of “paper” money issued by a central bank, legal tender.
- Budget—a financial plan adjusting expenses to income.
- Economy—a system of producing and distributing wealth and resources.
- Finance—managing money resources.
- Financial literacy—having the knowledge, skills and confidence to make responsible financial decisions throughout your life.
- Global marketplace—the demand for goods or services around the world. For example, if the Canadian marketplace is strong, there is a high demand for goods and services. (E.g., there is demand for Canada’s natural resources such as nickel.)
- Goods—any tangible item or product that you can purchase, possess and use.
- Identity theft—obtaining another’s personal information such as their social insurance number, date of birth, credit card numbers, bank account information, etc., in order to defraud the victim of money.
- Inflation—an increase over time in the price of goods and services.
- Joint bank account—an account that is shared by two or more individuals who have equal access and responsibility for the account.
- Needs—goods or services that are essential for life, such as shelter, clothing and food.
- Phishing—a common online scam designed to trick you into disclosing your personal or financial information, which is used for financial fraud or identity theft. A phishing scam usually comes through an unsolicited email that appears to be from a legitimate company.
- PIN, personal identification number—a secret numeric password used along with a debit or credit card that allows access to an account.
- Royal Canadian Mint—where Canadian coins are made under governmental control.
- Service charges—fees for use of services. For example, a service charge may occur every time you use a bank machine.
- Services—useful acts performed in exchange for pay.
- Skimming—a credit card and debit card scam in which the processing device at the point of purchase is compromised. When the card is inserted or swiped, it is read by a magnetic strip that copies the card’s information allowing the scammer to access accounts connected to the cards.
- Smishing—a mobile phone text that often refers to winning a prize. The text will asks for a response or provide a “click here” link that enables downloading of malware onto the phone. The phone may then be controlled by someone else. The name comes from SMS Phishing.
- Statement—a record of transactions for a bank account, credit card or investment account.
- Supply and demand—driving forces in a free market; demand refers to the measurable amount of a good or service wanted, while supply refers to the measurable availability of the good or service. The relationship between the two determines price.
- Wants—a desire for goods or services that are not essential for basic life. (E.g., entertainment, travel, luxury goods.)
Definitions were composed using the following resources:
Barber, Katherine, ed. Canadian Oxford Dictionary. 2nd ed.
Oxford: Oxford UP, 2004.
Investopedia. As of June 7, 2013, investopedia.com.
Soanes, Catherine, and Sara Hawker, ed. Compact Oxford
English Dictionary. 3rd ed, revised. Oxford: Oxford UP, 2008.