Financial Glossary

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Adjusted Gross Income (AGI)
The income from all taxable sources less certain adjustments that determines an individual's tax benefit eligibility.
Annual Percentage Yield (APY)
The annual rate of return on an investment that takes into account the effect of compounding interest.
Automated Clearing House (ACH)
A nationwide electronic funds transfer network that processes credit and debit transactions to bank accounts in the United States.
Backup Witholding
The IRS requires that Banks withhold 28% of any interest income earned on an account if the following occurs: (1) a W-9 Certification is not provided by the taxpayer, (2) the IRS notifies Discover Bank that the TIN provided is incorrect, or (3) if the taxpayer has been notified by the IRS that he/she is subject to backup withholding. If an account is opened online, the W-9 is executed electronically during the online application process. If an account is opened by phone or mail, the customer is required to execute a paper signature card which contains the W- 9 form.
Beneficiary
A person named to receive property pursuant to documents such as a will, trust, deposit account or IRA plan.
CD Maturity Date
The date when the CD term ends and the CD becomes payable.
Certificate of Deposit (CD)
A time deposit that is issued for a stated period of time and normally pays a fixed rate of interest.
Compound Interest
Interest that provides for faster money growth due to interest being accrued on both the principal and on any previous interest earned.
Debit Card
A bank card that draws funds from a deposit account via ATM or point-of-sale transaction.
Deposit
Funds placed with a bank in a savings or demand account.
Early Withdrawal Penalty
A fee charged for withdrawing money from a time deposit account prior to maturity.
Earned Income
Compensation types such as salary and commissions that are used for determining contribution eligibility for an IRA.
Electronic Bill Pay
A feature of online banking, which allows a depositor to send money from a transactional account to a creditor or vendor such as a public utility or a department store to be credited against a specific account. The payment is executed electronically within a few business days. The bank may also generate and mail a paper check to a creditor who is not set up to receive electronic payments.
Electronic Funds Transfer (EFT)
An electronic transfer of money between bank accounts.
Ending Balance
The account balance at the end of a period that reflects transactions occurring during that period.
Federal Deposit Insurance Corporation (FDIC)
A Federal agency that insures deposits in commercial banks and savings and loan associations.
Fixed Interest Rate
An interest rate that does not fluctuate.
Individual Retirement Account (IRA)
A personal retirement account allowing qualifying individuals to set aside a portion of annual income on a tax-deferred basis.
Interest Rate
The amount a financial institution pays to individuals for deposit funds.
Joint Owner
An individual who shares ownership of an account with one or more persons.
Liquidity
The degree to which an asset can be immediately converted into cash with minimal loss of value.
Money Market Account (MMA)
A deposit account which may have transaction and balance restrictions but typically offers a competitive interest rate.
Online Savings Account
An interest-earning account opened, funded and managed primarily on the internet, that typically has higher yields than a traditional savings account.
Phishing
Attempting to acquire an individual's username, password, etc. through fraudulent electronic communication.
Required Minimum Distribution (RMD)
The amount of money an owner of a Traditional IRA is required to take out by April 1 following the year he or she reaches age 701⁄2 and by December 31 for the subsequent years.
Return
A percentage showing the amount an individual profits on an investment.
Rollover
Transferring assets from one individual retirement plan to another.
Roth IRA
A retirement plan that is funded with after-tax dollars and allows for tax-free growth of earnings and withdrawals if held for 5 years.
Routing Number
A nine digit bank code, used in the United States, which appears on the bottom of negotiable instruments such as checks identifying the financial institution on which it was drawn. This code is also used by Federal Reserve Banks to process Fedwire funds transfers and by the Automated Clearing House to process direct deposits and other automated transfers.
Secure Socket Layer (SSL)
A cryptographic system used to securely transmit private documents and manage the security of data on the Internet.
Signature Card
A document establishing the account ownership and the account terms and obligations of both the institution and the customer.
Traditional IRA
A retirement plan consisting of tax-deductible contributions under certain income limits and tax-deferred growth of assets.
Variable Interest Rate
Interest rate that fluctuates according to changes in an index rule.
Wire Transfer
The electronic transfer of money between financial institutions.
Withdrawal
A removal of funds from a deposit account.
Yield
The annual rate of return on an investment.
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