Online Banking Terms
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Online Banking Terms
Before selecting any type of product or service, it is prudent to review and understand common terms and definitions associated with the subject so that you won’t be caught in a position of frustration and even economic hardship because you misunderstood what was meant. It is far better to ask questions and insist on answers you understand than to assume you know the answers when you don’t. Even some of the most common terms sometimes have different meanings depending on the subject matter. Here are some of the common terms associated with online banking:
Online Banking: Online banking allows you to access your bank account information via a personal computer or computer terminal. Available information includes your accounts and selected transactions, such as deposits, credits, fee charges and account balances. Access is allowed through the web site of the financial institution. Online banking is also called internet banking.
Online Bill Payment: Many online financial institutions offer online bill payment as a service. Usually there is a minimal monthly fee that allows account holders to enter the names of creditors, creditor account numbers and amount of the transaction. The checks are presented to the creditor electronically by the bank. In other instances, the bank cuts the check and mails it to the creditor. Eliminating the handling of paper checks by the customer is considered a convenience by many individuals.
Internet Bank: An internet bank, sometimes called a virtual bank exists only on the web. There are usually no ‘brick-and-mortar’ locations. Virtual banks thus reduce the overhead costs incurred due to costly structures. Internet banks typically offer higher interest rates and money market account rates which perform better than the national average.
Ledger Balance: The ledger balance is the account balance as the day’s beginning. It is sometimes called the current balance. It includes transactions from the previous day regardless of whether the deposits have been collected or not. Throughout the day, it may be adjusted by memo posts leaving an ‘available balance.’
Bill presentment: Online banking customers can take advantage of bill presentment. The customer gets the bill by way of the internet and pays the bill electronically through the creditor’s web site or by using online bill payment services.
Online banking deposit: Deposits to an online banking account can be made by mail, by automatic payroll deposit, by wire transfer, and sometimes at a branch bank. Electronic deposits usually do not have a hold placed on the funds.
Debit card: A debit card attached to an online banking account allows you to access your account at any ATM. There may be a ATM fee associated with cash withdrawals. A debit card can also be used in most places where credit cards or checks are accepted. Debit cards require that a PIN number be input to authorize the transaction.
PIN: The PIN or Personal Identification Number is a security code associated with the use of a debit or credit card at an automated teller machine (ATM). The security code is usually four to six numbers.
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