Glossary of Terms
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
A
ABN (Australian Business Number) - a number issued by the Australian Tax Office (ATO) to registered businesses in Australia. This number must be displayed on official paperwork and transactions for tax purposes.
Access Code - a code known only to the customer for accessing Phone Banking.
Account - See 'Bank account'.
Account balance - See 'Balance'
Account number - a unique number that the bank allocates to your account.
Accrued interest - interest that is owed, but isn't yet due to be charged or paid.
Additional cardholder - If you allow another person to use an ATM card or credit card that is linked to your account, they are a secondary cardholder. The secondary cardholder is not responsible for any money owed on a credit card. The credit limit on the card does not change or double when an extra card holder is added.
AML-CTF (Anti-Money Laundering and Counter-Terrorism Financing Act) - The AML-CTF Act is the law that requires information to be collected by specified organisations, including banks, from their customers. For example, to open a bank account, the AML-CTF Act requires Australian banks to perform a Customer Identification Process (CIP) on the customer and to keep that information. The AML-CTF Act requires the specified organisations to report large and suspicious transactions to a government department. The AML-CTF Act supersedes the Financial Transactions Reporting Act (FTRA), under which customers were identified using the "100 point check". See also 'Customer Identification Process'.
APR (Annual Percentage Rate) - the rate at which interest is charged on money that is owed over a one year period. Interest is usually calculated daily and may be charged monthly, quarterly or annually.
Assets - Everything that a person or company owns or has a right to, from which a benefit can derive. Net assets are assets in excess of liabilities. Liquid assets are assets either in the form of cash or readily convertible into cash.
At call - Funds which can be withdrawn on demand or without notice.
ATM (Automatic Teller Machine) - a machine found in a variety of public places that can be used to withdraw funds from your account, usually 24 hours a day.
ATM card - a card that provides access to your account via ATM and EFTPOS facilities. See debit card, ATM and EFTPOS.
ATO - Australian Taxation Office.
Australian business number (ABN) - A number issued to registered businesses in Australia by the Australian Tax Office (ATO). Each business has its own ABN and must use it on official paperwork and transactions and for tax (GST) purposes.
Australian Securities & Investments Commission (ASIC) - ASIC is an Australian government body that regulates banks and other financial services companies. ASIC is responsible for, among other things, consumer protection in superannuation, insurance, banking and credit. ASIC also regulates and enforces laws that promote honesty and fairness in financial products and services, in financial markets and in Australian companies.
Automatic deduction - see direct debit.
B
Balance (Final/Closing) - the amount of money in a bank account at the end of a certain period of time.
Balance (Prior/Opening) - the amount of money in your account at the beginning of a certain period of time.
Balance - The amount of money in your bank account. The balance can be positive/in credit or negative/debit.
Balance transfer - the transfer of whole or part of the outstanding balance of your credit card from one financial institution to your credit card at another financial institution.
Bank account - A financial product which allows you to deposit your money and gives you easy access to your money in the future. In Australia there is a large range of bank accounts that are designed to meet different customer requirements.
Bank fees - Charges made by a bank in return for the products and services provided.
Basis points - one basis point equals 0.01% interest. For example, 25 basis points equals 0.25%.
Bluetooth - is a proprietary technology standard which allows electronic devices (such as mobile phones) exchange data over short distances.
BPAY® - BPAY® is a service that allows people in Australia to easily pay their bills using their credit cards or from their bank accounts. BPAY® can be used on internet banking or phone banking. Most BPAY® payments are made over the Internet. BPAY® is registered to BPAY Pty Ltd ABN 69 079 137 518
Branch - A branch is like a bank shop where a bank's products and services are provided to their customers
BSB - A BSB is a number which is like an electronic bank address in Australia. A BSB identifies both the bank and the branch of the bank in Australia. Each bank branch will have a BSB. Every bank account will have a BSB associated with it. When you are transferring money in Australia the BSB of the sending and receiving bank should be provided.
C
Capital gain - Profit from sale of a particular asset at a higher market price than it cost. Investors often buy for the sale of an expected increase in value of an asset rather than of the income it may generate during the time they own it.
Capital Growth- The increase in value of an asset or investment i.e. the difference between the current values and the original purchase price. (Provided the result is positive, not negative)
Capital guaranteed - an investment where your money is guaranteed, usually by a bank, government body or life insurance company.
Card issuer - the bank, building society or other financial institution which provides your credit or debit cards.
Cash - money in the form of notes and coins.
Cash advance - a cash loan which is withdrawn using a credit card. A transaction fee may apply and interest is charged from the date the cash advance is taken until it is paid back.
Cheque - a written direction from one person (the drawer) to a bank to pay a sum of money to the person or organisation named on the cheque (the payee). If crossed 'Not Negotiable', the cheque can only be deposited into the bank account of the person named on the cheque.
Cheque account - an account which offers access to your money by writing cheques. If you do not have enough money in your account the cheque may not be paid and you may be charged fees.
Cheque Deposit Box - This service allows you to drop your cheques off at a branch for counting and processing at a later time, without having to wait to be served.
Cleared funds - the amount of money in an account that is available for you to access. Cheques deposited into your account may take up to three working days to clear - until then they are called uncleared funds.
Compound interest - Interest earned on money that is invested over a period of time that is added to the original amount invested (the principal) and interest is then paid on the entire amount. Over a long time compound interest can be a good way to increase your savings.
Consumer - A person who buys or uses products or services.
Contract - a legally enforceable agreement
Credit - Credit can have different meanings.
It can be a transaction on a bank account that shows money going into the account.
It can mean the amount of money you have. If your bank account is $200 in credit, it means you have $200 in the account. Credit also means buying goods and services now, but paying for them later. For example, buying something with your credit card and paying it back later, or taking out a home loan to buy a house. See 'Credit card', 'Credit limit' and 'Debit'.
Credit card - This is a plastic card that gives you access to money that the bank has agreed to lend you for a short period of time. It is important to manage the amount of money that you owe on your credit card and be aware of the interest that you are paying on the outstanding balance of your credit card. See 'Credit limit' and 'Credit'.
Credit limit - The maximum amount that a bank will lend you for a loan or a credit card.
D
Date of issue - The date a bill or account was prepared.
Debit - Most commonly, a debit is a withdrawal from a bank account.
Debit card - A card that gives direct access to a bank account through ATM machines and EFTPOS. See also ATM card.
Deposit - An amount of money put into a bank account or money that is left with someone or a company to secure the purchase of an item.
Direct debit - A payment that is made directly from a bank account and is usually an electronic payment. A direct debit is usually a transaction that has been requested by the account owner to take place at a specified time and on a specified date. For example, in Australia companies often use direct debit for payroll processing.
E
EFTPOS (Electronic Funds Transfer at Point of Sale) -This facility lets you use your ATM card (debit card) to purchase goods, pay for services, and withdraw cash at a supermarket, shop, or restaurant. Money is taken out of your bank account immediately to pay for the services.
Electronic banking - A way of banking that allows withdrawals, deposits and transfers to be completed and account information to be obtained electronically using processes such as telephone or Internet banking, ATMs or EFTPOS.
F
Financial Services Guide - provides you with information to assist you in making an informed decision on whether you want to use the products or services of a financial services provider.
Fixed interest- An annual percentage rate, or an interest rate that does not change for a specified fixed period.
FOS (Financial Ombudsman Service) - a free and independent dispute resolution service that considers complaints about Australian banks, insurers and other financial services providers.
Funds transfer - Moving funds from one bank account to another.
G
H
I
Interest - The return earned on funds invested
Interest adjustment - an adjustment sometimes made by banks or other financial institutions, which arises when a customer seeks to break a fixed term contract (either for a loan or a term deposit).
Investor - A person who lends money or buys assets or businesses and with the intention of making a profit.
J
K
KYC (Know your customer) - This is the process that a bank should generally undertake so that it is providing the best service and advice to its customers. KYC is most important for private and premium bank customers that may have more complicated banking and investment needs. In order to meet KYC requirements banks may ask for information such as your employment details, salary, assets and liabilities.
L
M
Maturity - The end or expiry of an investment or a loan.
Money order - Similar to a bank draft, a money order is an order for the payment of a specified amount of money, usually issued and payable at a bank or post office.
Monthly service fee and monthly account fee - a fee which is charged each month to maintain your account and varies depending on the type of account you hold.
N
Net worth - Your assets less how much you owe on your assets is your net worth. In order to meet basic needs and life events, an increase in your net worth should be a basic financial goal of most people.
Not negotiable - Words written on a cheque or bill of exchange to ensure that the proceeds of the cheque or bill of exchange are only paid to the person named.
O
Offset account - A bank account that is linked to a nominated home or residential investment loan. The balance of the offset account reduces the amount of interest payable on your linked loan. This does not mean that the loan does not have to be repaid, only that the amount of interest that is otherwise payable may be reduced. You will be able to access your money in an offset account
Online account opening - The process of opening an account on the internet. In Australia, most bank accounts, credit cards and loans can be opened or applied for over the internet if you are already a customer of the bank which is offering the product or service.
Online banking - Using the internet to manage your banking and for conducting transactions. In Australia the internet is very popular for checking bank account and credit card balances and making transactions such as transferring money, changing your personal details, paying bills and applying for new products and services. You will need to register with your bank to use their internet banking.
Original documents - Paperwork or documents that are not a copy or reproduction ie. not photocopied or faxed and all signatures on the document are original.
Over-the-counter - Any banking activity that is done in a bank branch.
Overdrawn - When an amount of money is taken out of a bank account which is greater than the balance of the account. Fees will usually be charged for overdrawn accounts and dishonoured cheques.
Overdue - An amount of money that has not been paid by the due date and is still owed.
P
Password - a code known only to the customer for accessing personal information and services such as Online Banking.
Pay anyone - A term that means to transfer funds to another person or a business by using internet or phone banking.
Pension - A regular payment made to a person from a superannuation fund or from the Department of Social Security or Department of Veterans Affairs.
Per annum (pa) - This means for the year. For example, if the interest rate on a personal loan is 9% pa the borrower must pay 9% in interest each year on the balance that is still owing.
Period - The same as time or term.
Periodical payment - Regular transfers or debits from your account which you instruct your bank to make to the account of another person or business. Setting up periodical payments with your bank is a very easy and convenient way to manage your money and payments.
Personal Identification Number (PIN) - A number used as a security access code for your bank accounts when you use internet banking, phone banking, an ATM or EFTPOS. You should be very careful with your PIN and never write it down, never give it to someone else, and change it often.
Phishing - is a way of attempting to acquire your personal information such as usernames, account numbers, passwords and credit card details by pretending to be from a trusted organisation or business. The information is then used to fraudulently access your bank accounts or credit cards. Criminals may even use your identity to obtain credit fraudulently.
Phishing is typically carried out by email or instant messaging and it often directs users to enter personal details at a fake website whose look and feel are almost identical to the real one.
Phone Banking - In Australia, phone banking is another popular way to check bank account and credit card balances and perform transactions, transfer money, change your personal details, pay bills and apply for new products and services. You will need to register with your bank to use phone banking.
PP (Periodical Payment) - a series of payments from an account made weekly, fortnightly, monthly, quarterly or annually.
Principal - For an investment, the principal is the amount of money invested upon which interest is then calculated.
R
Rate of return - the percentage change in the value of an investment in an asset (or portfolio of assets) over a specified time period.
Receipt - A record showing that a payment has been received or an invoice has been paid. Receipts are usually paper but may also be in electronic form for things that are bought using the internet or over the phone. Receipts usually have a reference number and show the amount of tax that is included in the payment. A receipt is important proof that goods and services have been paid for. See also 'Invoice'.
Records - Any documents and paperwork
Retail banking (personal banking) - Services provided to meet your personal banking requirements.
Rollover - the renewal of a loan or continuation of a deposit, usually including a revision of the interest rates.
S
Savings - Money that you put away for use at a later time. For example, you may save to buy a car or a house in the future. When a bank lends you money, they like to see a long history of steady saving. Saving is a good way to make sure you are able to meet your needs and the requirements of different life events. See also 'Term deposits'.
Savings account - An everyday bank account where your savings can be deposited and easily withdrawn.
Scams and scammers - A person or an organisation that is not honest, lies or cheats customers or consumers. For example, internet banking fraud, door-to-door con artists and the Nigerian letter scam.
Simple interest - Interest is paid on a set principal only and not re-invested.
Smartphone - is a mobile phone that is like a computer in your hand; it is capable of internet access, email, downloading applications, taking photos and conducting internet banking and shopping online.
Staff-assisted withdrawals - When you withdraw money from your bank account with the help of a transactor in a branch.
Statement - A record summarising all the transactions that have occurred on your bank account (or any other account) and any fees charged or interest paid each month or each quarter. In the past, statements were on paper and mailed to customers, but most Australians now prefer to use the internet to check their accounts and print statements at home or at the office. Bank books are not often used in Australia.
SWIFT - acronym for Society for Worldwide Interbank Financial Telecommunications,an international consortium of member banks operating a worldwide system for transfer of money and messages
T
Tax file number (TFN) - A nine digit number issued by the Australian Taxation Office to individuals and companies to identify them for taxation purposes. Every Australian resident, and registered company should have a TFN. A TFN is different to an ABN. See also 'ABN'.
Term - A period of time. For example, the length of time for which a deposit is made, or the time in which a loan must be repaid.
Term Deposit - Money invested for a fixed term at a fixed rate of interest which applies for the duration of the deposit.
Terms and conditions - Terms and conditions set out the specific obligations of each party in respect of a transaction or product. They outline how a bank product or service can be used and should be read and understood before the product or service is used. Terms and conditions are available from your bank and may also be provided in booklets called Product Disclosure Statements.
Tethering - is a method to share the internet connection of an internet capable mobile phone with another internet capable device such as a laptop. The connection can be made with a cable or wirelessly with Bluetooth or WiFi.
Transactions - The name given to movements of money such as deposits and withdrawals or transferring money between bank accounts.
Transactor - The person in a branch that is there to help you with your banking.
Transfer - To move money from one bank account to another bank account.
Trust account - An account that is usually used by lawyers, accountants and other professionals such as stockbrokers to identify and control their clients' money.
U
V
Variable interest - A type of interest where the rate may go up and/or down during the investment.
W
Wi-Fi - is a means by which electronic devices, such as computers, smart phones, games consoles etc can connect to the internet wirelessly.
Wi-Fi hotspot - a site that offers internet access over a wireless local area network through the use of Wi-Fi technology. Hotspots may be found in coffee shops, airports, shopping malls and various other public establishments and enable you to connect to the internet whilst within range of the hotspot.
Withdrawal - To take money out of an account, for example, using an ATM, EFTPOS or by cheque.
X
Z