Jump to: bank accounts, daily banking terms, money transfers, credit and credit cards, borrowing, mortgages, or investing.

Daily banking terms

• Visa Debit* card/bank card: A payment card linked to your bank accounts, allowing you to make everyday purchases (including online) and to withdraw cash.
• Direct deposit: Your paycheque and other regular payments can be deposited directly into your account electronically. To set up direct deposit, you’ll need to provide a void cheque or direct deposit form to the source of the deposit (such as your employer).
• Pre-authorized payments (Pre-authorized debits): Automatic payments you set up to pay recurring bills (like utilities or rent) directly from your bank account or credit card. These payments are set up directly with the recipient of the money, like a utility company or a landlord.
• Cheques: Paper documents used to authorize a payment from your chequing account to another person or business. These are less common now with electronic options available.
• Overdraft protection: A feature of some accounts that allows you to withdraw more than your balance, up to a limit. With overdraft protection you can have a negative balance in your account, but interest is charged daily on the overdrawn amount. You need to repay the full overdraft amount each month.
• Interest: Money charged for borrowing money or earned through deposits or investments. You will be charged interest when you borrow money, like with a loan or when you don’t pay the full balance of a credit card bill. You can earn interest through investments and through keeping money in some accounts like savings accounts.

Money transfers

• Interac e-Transfer^®: A convenient way to send money electronically between Canadian bank accounts.
• Wire transfer: An electronic transfer of money through a network run by banks and transfer service agencies around the world. Wires sent by ATB go through the SWIFT network. Wire transfers typically have higher fees than international money transfers. Wire transfers are most often used to send large amounts of money (more than $10,000).
• International money transfer: A way to securely send money to a bank account in another country by using the Interac network. International money transfers usually have a maximum value of $10,000 CDN.

Credit and credit cards

• Credit card: A card that lets you borrow money for purchases, but you need to repay the borrowed amount plus interest. Enjoy an interest-free grace period (usually 21 days) on new purchases if you pay the full balance by the due date. This doesn’t apply to cash advances or balance transfers. Unpaid interest gets added to your balance monthly, leading to compound interest. It’s best to pay your balance in full whenever possible.
• Primary cardholder: The person responsible for a credit card account and payments.
• Secondary cardholder: An additional cardholder who is also responsible for the amount owing on the account.
• Authorized cardholder: A cardholder who is not responsible for the amount owing on the account. Authorized cardholders still have access to the full credit limit on the account.
• Credit limit: The maximum amount you can borrow on your credit card, loan or line of credit.
• Available credit: The amount of credit you can use on your credit card or line of credit. This is calculated by subtracting your current balance (including any pending purchases or payments) from your total credit limit.
• Payment due date: The date your credit card payment is due (usually the same day of each month).
• Minimum payment: The minimum amount you must pay each month before your payment due date to avoid late fees and penalties.
• Rewards-based credit cards: Credit cards that offer points and other rewards for every dollar you spend. Rewards points can be redeemed items like merchandise, travel or gift cards, depending on the specific rewards program associated with your card.
• Cash back credit cards: Credit cards that give you a percentage of your purchases back as cash, typically applied directly to your credit card balance as a statement credit.
• Credit score: A number representing how likely a person is to pay back money they borrow, calculated based on their credit history and financial behaviour.
• Credit history: A record of your borrowing and repayment behavior, used to calculate your credit score.
• Credit check: A review of your credit history by a lender, landlord or employer. A credit check can influence your ability to access credit, rent a home or get a job.

Borrowing

• Fixed rate: An interest rate that remains the same for a set period.
• Variable rate: An interest rate that changes based on changes in market lending rates.
• Loan: Borrowed money that must be repaid with interest.
• Line of credit: A predetermined amount of money you can borrow as needed, without a term or amortization. As you pay it back (with interest), that amount of money becomes free again on the line to borrow. Once you borrow money from a line of credit, a minimum monthly payment is required until all money owed is paid back.
• Prime rate: The prime interest rate is the market rate used by financial institutions to determine the variable interest rates they offer in loans.

Mortgages

• Mortgage: A loan used to purchase a home with interest paid to the lender.
• Down payment: The payment you make towards the purchase of a home before you own it. The lender deducts the down payment amount from the mortgage. The minimum size is determined by the price of your house. In general, down payments smaller than 20% of the total price of the home require mortgage insurance.
• Conventional mortgage: A mortgage where the down payment is at least 20% of the home's value.
• High ratio mortgage: A mortgage where the down payment is less than 20% of the home's value, requiring mortgage insurance.
• Mortgage insurance: An insurance policy that protects the mortgage lender if you can’t make your mortgage payments. Mortgage insurance is required for high-ratio mortgages (less than 20% down payment). The cost of mortgage insurance is added to your mortgage payments. There are three Canadian mortgage insurers: Canadian Guaranty, CMHC and Sagen.
• Mortgage term: The length of time your mortgage contract is in effect. Terms range from a few months to five years or more. At the end of each term, you’ll need to renew your mortgage. You’ll probably need multiple terms to repay the mortgage.
• Amortization period: The total length of time it will take to pay off your mortgage in full. For most mortgages the period will span several mortgage terms.
• Fixed interest rate mortgage: A mortgage with an interest rate that remains the same throughout the term.
• Variable interest rate mortgage: A mortgage with an interest rate that fluctuates based on prime lending rates.
• Appraisal: A professional assessment of a property’s value, which is required by lenders for a mortgage.

Investing

• GICs: Guaranteed investment certificates (GICs) are investments that offer guaranteed rates of return over specific periods of time. GICs have a wide range of terms and flexibility. Some are nonredeemable, which means that you can't move the money out until the end of the term.
• Mutual funds: A mutual fund holds a collection of securities (like stocks, bonds and other assets) managed for a group of investors by a financial professional. When you buy into a mutual fund, you own a portion of each of its investments. You can choose from different mutual funds based on your risk tolerance. Mutual funds are ideal for medium- and long-term savings. Money in a mutual fund can be accessed anytime.

The following accounts are registered investment accounts that can be opened with your bank or investment company. Each offers unique benefits. The government determines rules and eligibility for each account and the amount you can contribute to each one. Learn more about these accounts from the Canada Revenue Agency (CRA). You can also log into CRA My Account, if you are registered, to see your own contribution limits.

• Tax-free savings account (TFSA): An investment plan where any investment growth is tax-free. TFSAs have a contribution limit for each year. This limit is set by the Government of Canada.
• Registered retirement savings plan (RRSP): An investment plan for retirement savings, with contributions being tax-deductible. RRSPs have a contribution limit, based on your earned income from the previous year.
• Registered education savings plan (RESP): An investment plan to save for a child's education, with government grants and tax benefits.
• First home savings account (FHSA): A registered plan that gives first-time home buyers tax benefits while they save for their down payment to buy or build a qualifying home.
• Registered disability savings plan (RDSP): A savings plan intended to help someone who is approved to receive the disability tax credit (DTC) to save for their long-term financial security.

ATB everyday banking advisors are here to help you and your family. For answers to your questions, to learn more about the Canadian banking system, and for advice on reaching your financial goals, book an appointment with an advisor at an ATB location near you.