Common Financial Terms You Should Know
- Money Management
- Cassie Brelo
Whether you’re buying a car or house, planning for retirement or preparing for another major life event, understanding all the financial requirements and terminology can be overwhelming. Most of us weren’t taught financial literacy skills in school but are expected to be financially savvy nonetheless.
At C&N, we believe knowledge is power. We’re here to help you make sense of common financial terms so the next time you need to make an important decision with your money, you’ll have the financial vocabulary to equip you for success.
Bank Account Terminology
Most of us use Checking and Savings accounts to manage our money. Here are some terms you may come across during your everyday banking.
- ACH/Electronic Debits: You can allow a company or merchant to request electronic payments directly from your bank account. These transactions are called electronic debits, or ACH (Automatic Clearing House) transactions, and are often managed through Online Banking. Real-life examples might include your monthly gym membership, Netflix or car insurance.
- Clear: C&N may use the term “clear” when a transaction (e.g., a check deposit) has been successfully credited or debited to your account.
- Direct Deposit: Direct deposit is a popular service C&N offers that allows your money to be electronically deposited to your account. You can use direct deposit for your paycheck, pension check or Social Security benefits.
- EMV Chip-Enabled Card: A credit card or debit card with a magnetic strip and microchip is known as an EMV or chip-enabled card. This technology uses encryption and dynamic, card-specific data to protect against credit and debit card fraud. C&N Visa credit cards and debit cards are chip-enabled for added security.
- Hold: When you deposit a check into your account, the funds deposited may be delayed before they are available to you. This is known as a hold.
- Internal Transfer: An internal transfer occurs when you move money between your C&N accounts. You can transfer money using Online Banking, Mobile Banking, an ATM or by visiting a branch.
- Low Balance Alerts: C&N’s Online Banking platform allows you to set up low balance alerts so you’re immediately notified if your account falls below a specified amount. This helps prevent overdraft and associated fees.
- Overdraft Protection: Overdrawing occurs when you try to spend or take out more money than you have in your account. With overdraft protection, you can link one account to another, like a Savings account to a Checking account, and use that balance or available credit to cover your transactions. C&N also offers overdraft privilege, which allows you to overdraw your account up to a specified limit for a fee—no linking required.
- Routing Number: A routing number is the nine-digit string of numbers on the bottom of your check, to the left of your account number. Each financial institution has a unique routing number, which allows funds to be transferred to the proper institution. You’ll need your routing number when setting up direct deposit, transferring money between institutions, paying bills by direct debit or for tax return deposits. Our routing number at C&N is 031308302.
- APY: APY stands for Annual Percentage Yield and is typically associated with deposits or investments. APY is the annual interest rate earned on qualifying accounts, representing the yearly amount of money returned to the owner. Common interest-earning accounts include special Checking and Savings accounts, as well as Certificates of Deposit. You can find C&N’s current rates for CDs and deposit accounts here.
- APR: APR, which stands for Annual Percentage Rate, is a term associated with loans. APR is the annual interest rate charged by a financial institution for lending money. This makes up the yearly cost associated with borrowing funds over the loan term and includes any fees an institution may charge. C&N’s current rates for mortgages and home equity lines of credit are listed here.
- Interest rate: Interest can either be charged or earned, depending on the situation. With loans, an interest rate determines the amount of money you will pay a lender to borrow funds. For example, if you are paying 3% interest on $1,000 borrowed, your interest payment will be $30. You can also earn interest on deposits, since institutions are effectively borrowing from you. Use our online calculators to estimate how interest will factor into your payments.
- Principal: Principal is the amount of money you borrow when taking out a loan. It does not include interest. When you make a monthly payment, you are paying back the principal, plus interest accrued and any related fees.
- Loan term: The term of a loan refers to the length of time required to pay it off completely with regular installments. Mortgage loans, for example, are commonly offered in 15-year and 30-year terms.
- Beneficiary: A person designated to receive distributions from a trust, 401(k) plan, IRA, will or life insurance policy is known as a beneficiary.
- Estate Plan: An attorney creates an estate plan to outline what will happen to a person’s money/assets if he or she dies or becomes incapacitated. Generally, the goal is to reduce taxes and mitigate the financial burden on the person’s family. An estate plan specifies how assets will be handled with heirs and how estate taxes will be addressed. It also names beneficiaries for things like IRAs, 401(k) plans and life insurance policies, and typically references a person’s will.
- Power of Attorney: Power of attorney is when a person has authority to act on behalf of someone else’s legal matters. A person may grant power of attorney if traveling overseas on military deployment, undergoing major surgery or unable to attend a mortgage closing.
- Trust: A trust is a legal document that certifies ownership of assets. It offers tax breaks and includes provisions as to how and when assets can be divided or distributed. For example, a person may setup a trust for a child but not grant access to the money until that person is 21. A trust can also be used to provide income for a family member who needs regular financial support because of a disability. C&N offers a variety of trusts to suit your individual needs.
Now that you know these common financial terms, you can feel more confident managing your money. Whether you’re looking for everyday banking solutions or making a major financial decision, C&N is always here to help. Contact us to learn more about how we can support your financial journey or visit one of our branches in Pennsylvania or New York.
Cassie began her banking career in 2001 as an Account Services Representative with Citizens Trust Company in Coudersport, PA where she worked for five years. In 2006, she left the industry temporarily to go to college full time at Mansfield University to pursue a degree in Business Administration. In 2008, Cassie was presented with an opportunity to work full time for Citizens & Northern Bank in Wellsboro, PA in their Deposit Operations Department. Since becoming an employee of Citizens & Northern Bank, Cassie managed their Overdraft Program for three years and then became the IRA Administrator and CD Specialist where she earned the national designation of Certified IRA Services Professional from The Institute of Certified Bankers in 2013. She was chosen to represent Citizens & Northern Bank at the Pennsylvania Bankers Association, Advanced School of Banking in 2013. In May 2015, Cassie was promoted to AVP/Branch Operations Coordinator where her responsibilities included effective management of branch staffing and scheduling models for all branch offices as well as implementation of operating policies and procedures.
Cassie graduated from the PBA Advanced School of Banking in July 2015 where she received the Dr. Philip O. Benham, Jr., Leadership Award, given to the top honor student. In January 2016, she was entrusted with the role of Regional Community Office Manager in addition to her Branch Operations Coordinator duties. She currently oversees two branch regions which include seven branch offices. Cassie has been with C&N for eleven years.