Glossary of Financial Terms

Savings & Investing

Annual Percentage Yield - The APY is the rate actually earned or paid in one year, taking into account the effect of compounding.

Compound Interest - Interest earned on previously earned interest as well as the principal.

Liquidity - The ability to turn assets into cash rapidly without a penalty.


Credit & Borrowing

Amortization -The process of paying a debt in segments over a set period of time, with a portion of each payment going toward principal, a portion toward interest.

Collateral - Assets pledged to secure the repayment of a loan.

Equity - The difference between the value of a property and what you owe on it.

Escrow - Deposit money held by a third party.

Liability - An actual or potential financial obligation.

Net Worth - Total assets minus total liabilities.

Principal - Portion of a loan payment that goes toward reducing the amount of the debt.

Term - Length of time it will take you to repay your loan if payments are made as scheduled.

General

Overdraft Protection - Overdraft protection is a service designed to help customers manage their finances. The first step to activating this special feature is establishing a line of credit. When the checking account balance falls below $0, transfers are made, usually in pre-determined increments, from the credit line to the checking account thus avoiding a charge for non-sufficient funds.

Sweep Account - Sweep accounts are available at many financial institutions. Please contact our treasury solutions team to learn more about business banking options and what may work best for you and your business.