Banking Tips & Terms

Our goal is to make banking easier and easier to understand. 

Our pledge to you and all our customers is to:
Practice fair banking 
Support financial literacy 
Take the mystery out of money management

Account
Account Analysis
ACH (Automated Clearing House) 
Affordable Housing
Affordable-housing Developer
APR (Annual Percentage Rate)
Assumable Mortgage / Assumable Loan
ATM (Automated Teller Machine)
Basis Point
Budget
Business Plan
Business Professional Associate
BusinessView(tm)
BusinessView Banker(tm)
Capital
Cash Management
Cashier's Check
CDARS
CD (Certificate of Deposit)
Check-cashing Fee
Checking Account
ChexSystems
CDB (Community Development Bank)
CDFI (Community Development Financial Institution)
Community Professional Associate
Compound Interest
Credit
Creditor
Depositor
Depository Account
Direct Deposit
Employee Banking Package
Fico
IDA (Individual Development Account)
Interest
IRA (Individual Retirement Account)
LMI (Low to Moderate Income)
Minimum Daily Balance
Minimum Monthly Average Balance
Money Market
Money Order
Mortgage
Network Surcharge
Overdraft Protection
Payday Loans/ Payday Lending
Safe Deposit Box
Savings Account
SBA (Small Business Administration)
Simple Interest
Stop Payment
Tiered Rate
Transfer Funds
Zero Balance Accounting

Account Analysis  An account analysis is a summary a bank provides of banking services for a business. Issued periodically, the account analysis statement gives a complete picture of an account. It may include Average Balance levels, account reconciliation, bank fees, bank services used, summaries of checking account and cash management services, Average Daily Float on uncollected checks, Earnings Credit Rate on collected balances, account activity charges, and account balances needed to pay for bank services (Compensating Balances). Companies use account analysis to help manage their cash position. Banks use account analysis to price and evaluate services and track banking services performance.

ACH (Automated Clearing House) ACH is the acronym for an electronic network for financial transactions in the United States. ACH processes large volumes of both credit and debit transactions which are originated in batches. Rules and regulations governing the ACH network are established by NACHA-The Electronic Payments Association, formerly the National Automated Clearing House Association, and the Federal Reserve (Fed).

Affordable Housing  Affordable housing is a term used to describe a dwelling or residence in which the total costs of housing do not exceed an accepted guideline. Those costs may include taxes, insurance, and utilities. The accepted guideline may be, for example, 30% of a household's gross income. The percentage varies with geographic regions. Policies to encourage the development of affordable housing may include zoning considerations, tax credits, subsidies and other solutions to make housing more affordable for people with low to moderate incomes.

Affordable-housing Developer  An affordable-housing developer is a person or company who facilitates the building of affordable housing. The developer takes initial financial responsibility in whole or part.

Amortize  Amortize means to pay off or settle a debt of money borrowed by installment payments over a period of time. The method is generally used for a home loan. Amortize also describes the practice of writing off expenditures, such as equipment, for tax or other purposes by prorating over a certain period. A prorated amount is divided or distributed evenly or according to a formula. 
 
APR (Annual Percentage Rate) APR can make it easier to compare lenders and loan options. Expressed as an annual percentage of the total cost of credit to the consumer, it prevents a lender from advertising a low rate and hiding fees. APR generally includes points and pre-paid interest, but fees included may vary with the lender. APR is the result of complex calculation and should be used only as a starting point for comparing loans and revolving credit costs. The concept can also be used to compare savings accounts by including transaction costs when calculating earnings.

Assumable Mortgage / Assumable Loan  An assumable loan allows one person to take over the existing loan obligations of another person. In an assumable mortgage, the buyer assumes the home loan from the seller.

ATM (Automated Teller Machine)  An Automated Teller Machine allows withdrawals from and deposits to established accounts with financial institutions. Withdrawals usually may be made with either a debit card or credit card. Banks usually have their own machines, located conveniently to serve bank customers. Bank ATMS generally allow use by customers of other banks. A bank may belong to an ATM network, allowing customers convenient access to ATMs near and far from their home bank or branch bank. A bank may charge customers "foreign" bank fees for using another bank's ATM or "out-of-network" fees for using ATMs not associated with the bank's network. In addition, a network may levy a network surcharge for use. Consumers should ask about and be aware of fees for using ATMs and make withdrawals accordingly. For instance, paying $4 in fees for a $20 withdrawal may be worth the convenience of getting cash in hand or it may not. Grocers and other merchants may allow a customer making a purchase with a debit card to take cash withdrawals for no fee or a nominal fee. OneCal's network is ALLPOINT.  OneCal customers also have access to Accel/Exchange, American Express, Cirrus, Discover, Maestro, Mastercard and Plus networks.

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Basis Point  A basis point is used in finance as a unit of measure, generally for interest rates and yields. It may also refer to the percentage change in the value of an asset such as a stock. One basis point equals 0.01% (1/100th of a percent) or 0.0001 in decimal form. If the Federal Reserve Board raises interest rates by 20 basis points, it means that rates have risen by 0.20% percentage points. For example, if rates are at 2% and the Fed raises them by .20% or 20 basis points, the new interest rate is 2.20%.  If a money market account or certificate of deposit pays interest at .50 basis points below tiered rates, it means that the tiered rate will be lowered by .50 basis points. For example, if the tiered rate is 3.75%, the rate at .50 basis points below tiered will be 3.25%.

Budget  The word "budget" comes from the Middle English "bouget" or wallet and the Old French "bougette," the diminutive of "bouge" or leather bag. A budget can be thought of as having in one place all the inflow and outflow of money. This is an itemized summary of expected income and expenses, as for a household budget. A budget may also be the total sum of money attached to a particular project or organization over time, as "an annual budget of $10 million dollars." For other purposes, a budget may be an organizational plan involving complex accounting procedures. With any budget, there is a bottom line, the point at which all expenses are deducted from all income. Simply put, if a budget is "in the black," there is more income than expenditure. If a budget is "in the red," there are more expenses than income. For financial success, it's wise for an individual, family, business or organization to establish a realistic budget and stick to it. Budgets should be reevaluated from time to time, especially when there is a major shift in income or expenses.

Business Plan  Most businesses begin with a plan. It may be sketched on a napkin over lunch-"A better mousetrap!"- or fully flushed out in a written document with details on anticipated income and expenditures, products, services, marketing, management, and growth. Ideally, a business plan will contain the vision for the company along with realistic steps on how to realize that vision. A good way to start a plan for one's business is by asking questions: What is my vision for this company? What products or services will the business offer that is better than or different from what is currently available? What will I be doing? What do I need to start? Who can help? Who will my customers be? How much should I charge? A business plan should be a useful document that grows and changes with a business. Many resources are available to help in developing a good business plan, whether for entrepreneurs just starting out or for business owners wanting to finance and grow an established business. Ask your OneCal Banker for assistance.

Business Professional Associate  OneCalifornia Bank offers banking packages for Business Professional Associates. These are employees of businesses that bank with OneCal. Packages may include direct deposit features, reduced service charges and other benefits.

BusinessView  BusinessView is OneCal's online Cash Management services platform for growing businesses and nonprofit organizations. It offers a suite of banking services and money management assistance. BusinessView includes account reporting and transaction initiation capabilities, online stop payments, ACH (Automated Clearing House) origination, and wire transfers.

BusinessView Banker  BusinessView Banker is OneCal's remote deposit capture tool. It's available for a fee when enrolled in BusinessView. Using a computer and scanning device certified by OneCal, you are able to submit deposits to your OneCal business checking account from the convenience of your office.

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Capital  Capital refers to accumulated wealth in the form of money, property or other assets. Capital may be owned by an individual, a partnership-married couple, business partners or other legal entity-or corporation. Capital is generally thought of as material wealth used to create more wealth. Capital can also be an intangible, as in the value of an idea or action-political capital, social capital or intellectual capital. "Capital improvements" may be assets, such as building renovations undertaken by a business, which add a value greater than their costs to the business' ultimate value in the marketplace. 

Cash Management  At its most basic, this term refers to the management of money. In business, sound cash management practices can have positive, long-term impact on business growth and financial success. Poor cash management practices can harm or destroy a business. At OneCal Bank, Cash Management refers to a suite of banking services for businesses and nonprofit organizations. It includes online banking, account reporting and transaction initiation capabilities, online stop payments, ACH (Automated Clearing House) origination, and wire transfers.

Cashier's Check  A cashier's check is guaranteed by a bank. Cashier's checks generally have security features such as watermarks, security threads or color-shifting ink. The check is drawn by the bank on its own funds and made out to a payee. The purchaser of the check pays for the full face value of the check by depositing that value with or giving that value to the issuing bank. In addition, the purchaser may pay a small service fee. The check is generally signed by one or two bank employees or officers or incorporates a facsimile signature. Banks may treat other banks' cashier's checks as cash and clear them instantly, or there may be a deposit hold-a waiting period for clearance-for checks over $5000. A cashier's check is useful when the purchaser must prove to a payee that specified funds are available.

CDARS (pronounced cedars)  CDARS is the Certificate of Deposit Account Registry Service.(r) With CDARS, you can have FDIC insurance on deposits of up to $30 million with one bank. Your funds are placed in certificates of deposit issued by a bank that is member of a special CDARS network. Those deposits are made in increments of less than $100,000 to insure that both principal and interest are eligible for full FDIC insurance. ($100,000 is the insurance limit set by the FDIC for a deposit account, though certain retirement accounts may now be insured up to $250,000.) A depositor receives one regular statement detailing the CD investments. There are no hidden fees for using the CDARS service. CDARS is a secured savings solution for nonprofits, public funds, businesses, advisors (including trustees, CPAs, financial planners, and lawyers), socially motivated investors and individuals with accumulated wealth and/or high incomes.

CD (Certificate of Deposit)  A Certificate of Deposit is a financial savings product offered by banks and other financial institutions for a set time period. Similar to savings accounts, CDs are insured by the FDIC. Different from savings accounts, CDs have a fixed term (from seven days to three years or more) and usually have a fixed interest rate, though variable rate CDs are available. When a CD is held until maturity or fixed term, the money may be withdrawn along with the accrued interest. If the money is withdrawn before the end of the fixed term, an early withdrawal penalty usually applies. In general, CDs with larger amounts of principal carry higher interest rates. Also, in general, a longer fixed term carries a higher interest rate. The person who opens or purchases the CD may receive a passbook or paper certificate. More commonly, there is no "certificate" but an item shown in the certificate holder's bank statement.

Check-cashing Fee  Check-cashing fees are associated with check-cashing stores that charge high or excessive fees to cash a check. These stores may charge the equivalent of a bank's monthly checking account service fee or much more to cash just one check. If you use a check-cashing store, be sure to ask for the fee in dollar amounts and insist on an itemized receipt.

Checking Account  A checking account is a deposit account held at a bank or other financial institution. It usually provides frequent and immediate access to funds through check writing, electronic or debit card transactions and teller transactions. Some accounts, such as money market checking accounts, may place monthly limits on withdrawals and other transactions, though access is still immediate. Most checking accounts require a minimum amount to open and may require a minimum balance. Banks may charge a service fee and may waive that fee if the customer uses direct deposit of paycheck or maintains a set minimum daily balance or monthly average collected balance. Checking accounts are insured by the FDIC up to a set limit, just as savings accounts are. A bank will periodically and routinely issue a statement of the account to the customer, detailing and summarizing transactions. Owners of checking accounts are responsible for keeping track of deposits and withdrawals, including checks, electronic and teller transactions. A check written for an amount should represent an actual amount of money in the account, just as a debit drawn against the account electronically should be made with knowledge that the amount of money in the account will cover the debit. When an account holder writes a check for more money than is in the account, he or she may be charged fees both by the bank and the check recipient for a "bounced" or returned check or face possible legal action. Banks may cover the overdraft amount and bill the customer for the amount, as well as charge insufficient funds fees and interest.

ChexSystems  ChexSystems is a check verification service and consumer credit reporting agency. Member banks of Chex Systems, Inc. network report data on how consumers handle deposit accounts. The service is designed to help limit fraud and ensure that only financially responsible people open and maintain checking accounts. ChexSystems shares this data with member banks and does not decide on new account openings. ChexSystems is a registered service mark of eFunds Corporation. Customers can be reported to the agency for reasons ranging from serious fraud to multiple overdrafts. Being reported to ChexSystems can damage a person's ability to open a checking account for several years. For people who may have a poor rating with ChexSystems, OneCal offers the Fair Start Bank Account. There are no checks and no overdrafts possible. Establishing a responsible banking relationship while using this account gives people a way to repair their damaged ChexSystems Score.

CDB (Community Development Bank)  A Community Development Bank is a financial institution designed to serve residents and spur economic development in low- to moderate-income (LMI) geographical areas in the United States. See OneCal's brochure: "OneCalifornia's Community Development Banking."

CDFI (Community Development Financial Institution) Used interchangeably with CDB.

Community Professional Associate  OneCalifornia Bank offers banking packages for Community Professional Associates. These are employees of nonprofit and community service organizations that bank with OneCal. Packages may include deposit deposit features, reduced service charges and other benefits.

Compound Interest  In a deposit account, such as a savings account or certificate of deposit, compound interest earned is calculated on the principal, or original amount still in the account. Additionally, it's calculated on accumulated interest that has been added to the principal. In a loan, compound interest owed is calculated on the principal, or original amount borrowed and not repaid, as well as on accumulated interest that has been added to the principal. The frequency of compounding affects the balance: more frequent compounding makes the balance grow faster. For a savings account, this is desirable. For a loan repayment, this makes the loan more expensive over time. Compound interest rates may be referred to as Annual Percentage Rate (see APR), Effective Interest Rate or other terms. (See also Interest and Simple Interest.)

Credit  Credit refers to the reputation for solvency and integrity of a person or corporate entity. To put one's own or someone else's "good credit" at risk is to damage the trust that others have in that person's ability to borrow and repay money. A good credit rating is earned and is valuable to the person or corporation who carries it. Credit also refers to the arrangement for deferred payment of a loan or purchase ("I bought my TV on credit!"), the terms governing such an arrangement ("Low APR, easy credit!"), and the time allowed for repayment ("36 months to repay!"). Credit is not inherently good or bad. Businesses and institutions can offer good or bad deals to borrowers; borrowers can handle their credit obligations well or badly. There are costs and rewards associated with credit. Borrowing on credit means using someone else's money for one's own purposes and repaying over a period of time. In exchange, borrowers pay interest to lenders. The cost of a loan or revolving credit can ultimately be much greater than the amount borrowed. Lenders are compensated for having their money work for borrowers. That compensation is in the form of interest paid by the borrower. Lenders can profit greatly by lending and look for opportunities to earn interest on their money. Credit, when used wisely, can create rewards for the borrower, in terms of education, careers, business growth, other investments and life goals. Questions to ask in borrowing or lending are: "For whom or what is my money working? Whose money is working for me? What are the true costs and rewards of the credit arrangement?"

Creditor  The person, business or institution to whom the borrower owes money or other debt.

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Depositor  One who deposits money with a bank or other financial institution for safekeeping, convenience of banking services, savings or investment.

Depository Account  Depository accounts include a number of bank accounts to which deposits are made. Depending on the type of account, a depositor may earn interest. on these accounts. A depository account is different from a loan account or line of credit, from which money is borrowed and interest is paid by the borrower to the lending institution.

Direct Deposit  When you participate in direct deposit, an employer sends your paycheck directly to your checking or savings account. There are several advantages, including convenience, quicker access to your funds and the ability to have the funds automatically divided among your accounts. Some banks offer fee reductions and other benefits for customers choosing direct deposit.

Employee Banking Package  OneCal offers employee banking packages to employees of businesses and nonprofit organizations that bank with OneCal. Features include direct deposit, service charge reductions and other benefits. Ask about OneCal's Business Professional Associates and Community Professional Associates programs.

Fico is the acronym for Fair Isaac Corporation, which created the best-known credit score model in the United States. The FICO score is calculated statistically, with information from a consumer’s credit files, and primarily used in credit decisions made by banks and other providers of credit. The credit file information typically comes from Equifax, Experian and TransUnion, the three major credit bureaus, which have their own scoring mechanisms. Many lenders use a third party system such as FICO to evaluate a borrower’s credit worthiness.

IDA (Individual Development Account) Community development banks, foundations and other community development financial institutions use IDAs to encourage people with low incomes to save. People who save with IDAs are rewarded. Individuals establish regular savings programs for specific purposes, such as saving for a down payment on a house, education or to start or purchase a small business. Savings matching is provided through a variety of government and private sector sources.

Interest  Interest is a rate charged or paid for the use of money. It is often expressed as an annual percentage of the principal, which is the amount borrowed or invested. A borrower pays interest to a lender. When a depositor earns interest through a bank savings account, it is because banks can put a percentage of deposits to use in lending. The bank charges borrowers interest and can thus pay a percentage of interest earned to the depositor. Interest rates change as a result of inflation and Federal Reserve policies. Interest rates are influenced by several factors, including amount of risk to the lender, credit history of the borrower, amount of money borrowed and length of time for repayment.

IRA (Individual Retirement Account)  IRAs are special accounts with tax advantages to help people save for retirement. Two types of IRAs-Traditional and Roth-offer different advantages and restrictions.

LMI (Low to Moderate Income)  LMI is used to define geographic areas and populations according to income levels. The LMI distinction serves in assisting these areas or populations through community development, social programs, lending and other financial help. US Census tract data from 2000 shows a low- to moderate-income area as one in which the poverty rate for the census tract is at least 20 percent or the median family income (MFI) of the census tract does not exceed 80% of the medium family income within the metropolitan area. LMI also stands for Low and Moderate Income.

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Minimum Daily Balance  This is the minimum amount required to have in a checking or savings account each day. Maintaining the balance may allow the depositor to earn interest, avoid a service charge, keep the account open or qualify for special benefits.

Minimum Monthly Average Balance  This is a dollar amount tallied by adding the daily ledger balances of an account and dividing by the number of days in the month (or reporting period.) Maintaining this balance may waive service fees or allow other benefits. When tallying a Minimum Monthly Average Combined Balance, banks add the minimum monthly average balances of the depositor's eligible accounts.

Money Market  Money market refers to the trade in short-term low-risk securities, such as certificates of deposit and U.S. treasury notes. It also refers to a mutual fund that sells its shares in order to purchase short-term securities, the income from which is distributed among shareholders in the form of additional shares in the fund. In this sense, also called money market fund.

Money Order  As an alternative to a cashier's check, the money order may be considered safer than a personal check. A money order is a payment order for a pre-specified amount of money, usually limited to a face value amount (U.S. Postal Money Orders are limited to a maximum of $1000 under U.S. law.) The money order is prepaid by the purchaser and signed by the purchaser. A money order should be made out to a payee. A blank money order, if lost or stolen, could be cashed by anyone. A money order won't bounce, because it is prepaid, and it does not expire. However, many insurance companies, brokerage firms, and some banks won't accept them because they require more regulatory processing than regular checks. Still, money orders remain trusted financial instruments with billions of dollars worth bought in the U.S. every year. Originally money orders were issued by the U.S. Post Office as an alternative to sending money through the mail. Today, money orders can be purchased at a Post Office, bank, grocery or convenience store. The purchaser should inquire about fees charged for this service.

Mortgage  In a mortgage, real or personal property is used as security for the payment of a debt. The term as a noun also refers to the debt secured by the mortgage-the mortgage loan. In use as a verb, mortgage is the action of pledging or conveying a property by means of a mortgage. The word derives from the French word "mort" (dead) and Germanic "gage" (pledge). Historically, the deed for a property would be given by the borrower to a lender as security against a borrower's debt. If the borrower died, then the lender took possession of the property. In modern use, taking on a mortgage is a commonly accepted way for people to finance homes and other real estate. The bank or other lender holds a lien on or legal right to the deed of the property until the principal amount borrowed and interest charged for the loan is paid. Reputable lenders and mortgage companies work with borrowers to find appropriate mortgage loans based on the borrower's purchased real estate value and ability to repay the loan.

Network Surcharge (See ATM)

Overdraft Protection  Overdraft protection is offered by banks as a way of helping customers avoid bounced check fees. Overdraft protection is essentially a line of credit or instant loan that covers the amount of overdraft from check writing or use of debit card. If the overdraft is paid off quickly, the interest and any accompanying fees for the protection feature are usually much less expensive than the bounced check charge. Some banks offer accounts that handle overdrafts through "insufficient funds" fees. On these accounts, the bank pays the overdraft amount. Sometimes banks charge a high fee, as well as a daily fee until the overdraft amount and fees are paid down. When opening your account, ask about overdraft protection options for your checks and electronic debits. Use this feature wisely.

Payday Loans/ Payday Lending  Also called "predatory lending," these types of loans and lending practices charge excessively high interest rates on money loaned. Payday lending is associated with getting an advance against one's paycheck. The terms also refer to lenders who advertise "Instant Credit!" or "No Credit Check!" and give cash advances at high rates. Many people with low incomes or in financial difficulty can get trapped in a cycle of borrowing and paying back at high interest rates until they owe more than they can possibly pay. If you are caught up in a cycle of payday lending, OneCal Bank may be able to help. OneCal offers the Fair Start Bank Account to help people disengage from payday lenders.

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Safe Deposit Box  A Safe Deposit Box is a physical place within a bank. The service allows customers to rent a lockable box as a secure holding place for documents and other valuable items that would be difficult or impossible to replace. Safe Deposit Boxes are usually accessible during a bank's open hours. If you have original documents that might be needed in an emergency, such as power of attorney, keep them where they are safe and available at any time, and put a copy in your Safe Deposit Box. Ask your banker about the advantages of renting a Safe Deposit Box.

Savings Account  Savings accounts are designed for bank customers to set aside money for safekeeping and to earn interest. This money is not accessible by check as in a checking account. Teller or electronic withdrawals and transfers to other accounts are usually allowed. Withdrawals from timed accounts, such as savings clubs, are usually not allowed without an early withdrawal penalty. As companions to checking accounts or separately held, savings accounts are an important part of a person's financial management plan and financial success. Banks are able to use a percentage of savings deposits to lend to other customers and for that privilege banks pay the savings account holder part of the interest, which is referred to as interest earned (see Interest, Compound Interest, Simple Interest). Savings accounts are insured by FDIC up to a set limit.

SBA (Small Business Administration) The U.S. SBA is an independent agency of the federal government. It was created in 1953 to aid, counsel, assist and protect the interests of small business concerns. For more information, visit http://www.sba.govor ask your banker. OneCal is an SBA Small Business Lender.

Simple Interest  In simple interest, a percentage of the principal is simply added to the principal and not compounded. (See Compound Interest and Interest.)

Stop Payment  If you've written a check in good faith and decide that you don't want to honor the payment, you can ask the bank for a stop payment. This can be put into effect if the check has not been cashed. Banks usually charge a fee for this as a one-time service or as part of a business package.

Tiered Rate  Tiered rate can refer to any rate structure that has stepped amounts. The rates may be used for billing customers, such as for utility use, or for paying customers, such as with interest on savings or other deposit accounts. In tiered rate interest, the interest rate goes up with a higher balance and decreases with a lower balance. Ask your banker about accounts that pay tiered rate interest and about posted tier breaks or rates assigned to ranges of dollar amounts.

Transfer Funds  Transfer Funds or Funds Transfer refers to moving money from one account to another. For instance, money may be moved from a personal savings or money market account to a checking account, or from one business account to another. Transfers use electronic technology via online banking or ATM. The use of Transfer Funds can help with money management. Generally, a checking account earns no interest or a lower interest than a savings or money market account. You can track of your checking account minimum balance, move money into the account when needed, and keep as much money as possible in your higher interest-earning account.

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Zero Balance Accounting  Zero Balance Accounting is a feature offered by banks to business customers for cash management purposes. Your business checking accounts are linked to a central business account of your designation, also called a central concentration account. Routine transfers are made through an automated process for funding or debiting the checking accounts. During the business day, checks and deposits are posted against the checking accounts. The temporary excess or deficit position is balanced automatically at the close of the business day, bringing the checking accounts to a zero balance. This feature allows business owners to keep track of their cash position and maintain funds in a higher interest-earning central account.