1. BANKING
TERMINOLOGY & WHY WE BANK

2. WHY DO WE HAVE BANK
ACCOUNTS?
 Safety and Security: A bank is a safe place to keep
your money when you are not using it. Your money and
your personal information are protected.
 Savings: A savings account is a way to save your money
so it will be available for both your short-term and long-
term needs.
 Earn interest: On some bank accounts, the bank pays
you a sum of money called interest. This interest helps
your money make more money. The more money in your
account and the longer you leave it in, the more interest
you will earn.

3. WHY DO WE HAVE BANK
ACCOUNTS?
 Access to a variety of banking services: A bank account
is not just a place to store money. Many people use banks
to process transactions and do other financial activities.
For example, if you have an account called a “chequing
account,” one of the ways you may pay bills is by cheque.
This is a written order to the bank to pay a certain amount
of money from your account. To pay your rent, for instance,
you can write a cheque and mail it – rather than go to a
bank, take out cash and bring it to your landlord yourself.
There are many different banking services you can use,
including getting assistance from your bank's customer
service representatives, paying bills, using banking
machines, making direct debit purchases and having direct
deposit of money owed to you. Many of these services are
discussed in this booklet.

4. WHY DO WE HAVE BANK
ACCOUNTS?
 Record-keeping: With a bank account, you receive account
records to help you keep track of your money. This way, you know
how much you spend and what you spend it on.
 Convenience: A bank account offers convenience in helping you
manage your money. For example, with a bank account you will be
able to get a bank card, also called a debit card, which allows you to
use over 16,500 banking machines across Canada. Banking
machines provide 24-hour access for making deposits, withdrawals,
paying bills and transferring money.
A bank account also gives you access to telephone or Internet
banking, where you use your phone or computer to do things like
pay bills, transfer money between accounts and get updates on
your account.
 It's a good reference: When you need a loan or want to apply for a
credit card, your bank account shows how you have handled your
finances in the past. This is a good reference that may help you get
your loan or credit card application approved.

5. Types of Accounts
 There are three types of accounts
1. Savings Accounts
2. Chequing Account
3. Combination Account

6. Chequing Account
 If you want to keep some money handy for paying
bills or personal expenses, you should think about
opening a chequing account. This type of account
is good for money you expect to need from day to
day. You may take your money out at any time in
person, at a bank machine, by writing a cheque or
by direct payment. Chequing accounts usually
have lower service fees than savings accounts.
Some chequing accounts do not pay interest and
some do (a chequing account usually pays a
lower rate of interest than a savings account). Ask
your bank for more information.

7. Savings Account
 If you want to save some money for your
short-term needs, think about opening a
savings account. This type of account is a
good choice if you don’t need to use your
money right away or you don’t intend on
having much account activity in a month. The
bank will pay you interest. The amount of
interest will vary, depending on the type of
account you choose and interest rates in
general. You may take your money out any
time.

8. Combination Account
 If you want to save some money but you also
want to keep some handy to cover expenses
and manage your day-to-day finances, you
should consider opening a combination
account. This type of account is part savings
and part chequing. You may take your money
out any time in person, at a bank machine, by
writing a cheque or by direct payment. Interest
is usually paid on these accounts on amounts
above a set level.

9. Banking Terminology
 Account Money deposited with a financial institution for
investment and/or safekeeping purposes.
 Assets Items of monetary value (e.g., house, land, car),
owned by an individual or a company.
 ABM Acronym for automated banking machine.
 ATM Acronym for automated teller machine.
 Balance An outstanding amount of money. In banking,
balance refers to the amount of money in a particular
account. In credit, balance refers to amount owed.

10. Banking Terminology
 Bank An establishment for lending, issuing, borrowing, exchanging, and
safeguarding money.
 Certified cheque A cheque issued by a bank, drawn on its own funds rather than on
one of its depositors.
 Chartered bank Non-governmental financial institutions. Sometimes called full-
service banks because they provide a wide range of services, such as chequing and
savings accounts, credit and loan arrangements, and safety deposit box rentals.
Chartered banks also sell and redeem savings bonds.
 Cheque Any written document instructing a bank to pay money from the writer’s
account.
 Chequing account An account for which the holder can write cheques. Chequing
accounts pay less interest than savings accounts, or none at all.

11. Banking Terminology
 Credit Union A member-owned financial institution, either
provincially or federally chartered. Often more competitive than
banks and trust companies because its nonprofit status makes its
operating costs lower.
 Debit Card A banking card enhanced with ATM (automated teller
machine) and point-of-sale (POS) features that can be used to
purchase goods and services electronically. The card replaces cash
or cheques. Transactions are deducted from the cardholder’s bank
account either immediately or within one to three days. Depending
upon the type of card, a debit card may require a signature or
entering a PIN number into special equipment. Debit cards may
also be used to make Interac® Direct Payments (IDP).
 Internet banking (cyberbanking) Allows a person to conduct
banking activities such as transferring money between accounts or
paying bills from their personal account using the Internet.

12. Banking Terminology
 Interest The fee paid for the use of money. Interest
may be paid, for example, by an individual to a bank
for credit card use, or by a bank to an individual for
holding a savings account; interest is expressed in
terms of annual percentage rate (APR).
 Joint account A savings or chequing account
established in the names of more than one person
(e.g., parent/child, wife/husband).
 Mortgage A long-term loan obtained by individuals to
buy a home that legally transfers ownership from the
debtor to the creditor until the debt is paid.

13. Banking Terminology
 NSF Non sufficient funds
 NSF cheque (bounced cheque) A cheque that a bank has
refused to cash or pay because there are not enough funds
to cover the amount written on it, in the account of the person
who wrote the cheque.
 Overdraft A cheque written for more money than is currently
in the account. If the bank refuses to cash the cheque, it is
said to have “bounced.”
 Passbook (Bankbook) A booklet given by the bank to the
depositor to record deposits, withdrawals, and interest earned
on a savings account.

14. Banking Terminology
 Personal identification number (pin) It is a
unique number or code entered by a customer
when using an ATM, or accessing
INTERAC®, PLUS® or CIRRUS® service.
 Reconciliation Checking all bank account papers
to make sure that bank’s records and yours agree.
 Savings account A bank account that accrues
interest in exchange for use of the money on
deposit.

15. Banking Terminology
 Service charge A monthly fee a bank charges for
handling an account.
 Stop payment A request made to a bank to not pay a
specific cheque. If requested soon enough, the
cheque will not be debited from the payer’s account.
Normally there is a charge for this service.
 Withdrawal An amount of money taken out of an
account in cash, by cheque or debit card, or by
automatic withdrawal.