10 Finance Terms Everyone Should Know

Celebrate Financial Literacy Month by brushing up on your definitions.

It’s never been easier to bank as in today’s world. With online and mobile banking, new platforms for fast loan approvals and even tools for financial goal planning, there are plenty of reasons personal and business financial management are more simplified than ever.

One common set-back? Oftentimes, these handy tools and websites use terms people might not know the meanings of.

According to the FDIC’s latest survey data, at least one member of 94.6 percent of U.S. households (approximately 124.2 million) had a checking or savings account, but a study cited in Fortune estimated that nearly two-thirds of Americans couldn’t pass a basic financial literacy test.

So if you feel like you aren’t up-to-par on your finance lingo, you aren’t the only one. And, you’re in the right place.

Here are 10 finance terms and definitions to get you started:

1. Annual percentage rate (APR)

The interest rate and fees or additional costs you’re charged per year for a loan or credit card. Essentially, it’s what you pay to “borrow” money. The lower the rate, the better for consumers.

2. Balance due

The payment amount you are required to make by a specific date. This typically applies to credit cards and lines of credit. Pay special attention to the due date, as late payments may result in fees.

3. Credit limit

The maximum amount of money you have access to charge on a credit card or line of credit. Generally, a lender determines your credit limit based on your credit score, income, debt obligations, among other factors.

4. Direct deposit

An automatic payment made to your account by your employer or an outside agency (like a pension or government benefit payment). These are usually recurring, sparring you the hassle of physically depositing a check.

5. Fixed rate

A rate of interest (see below) that does not vary for the entire term (see below) of the loan.

6. Home Equity Line of Credit (HELOC)

A line of credit secured by your home that gives you a revolving credit line to use for large expenses or to consolidate higher-interest rate debt. Learn more here.

7. Interest

The cost of borrowing money or the amount earned on a deposit account. To calculate simple interest, multiply the original amount (of your savings or your loan) by the interest rate.

8. Overdraft protection

Overdraft Protection allows you to link your eligible checking account to other Amerant accounts and automatically transfers available funds from your linked backup account(s) to cover transactions that exceed the available balance in your checking account. It can help you avoid declined transactions, returned checks and overdrafts.

9. Routing number

The first nine numbers that appear at the bottom of a check to identify the financial institution responsible for holding the account. Amerant’s ABA routing number is 067010509.

10. Term

The time to the maturity of a loan or deposit. For example, a personal loan can have a term of one year or five years.

At Amerant, our biggest priority is making banking easier for our customers. For helpful news and tips, visit our blog, Amerant Of Interest, and follow us on Facebook, Twitter, Instagram and LinkedIn @AmerantBank.