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Many financial terms differ from country to country.
This page contains an alphabetical list of key banking
words and phrases that are used throughout this website,
along with their definitions.
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Account balance — The amount
of money currently in your bank account.
Amortization period — Number
of years it takes to repay the entire amount of a mortgage.
Automated Teller Machine (ATM) —
A self-service machine where you can complete basic
banking transactions and withdraw cash using your Client
Card and a PIN. Also known as an Automated Banking Machine
(ABM).
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Banking card (see Client Card).
Banking machine (see Automated Teller Machine).
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Cheques — A way of paying for
goods or services. A cheque is written for the amount
to be paid, and when the recipient cashes the cheque,
the money is transferred from the payer’s account
into the payee’s account.
Client Card — This is provided
to you when you open an account. It allows you to access
your accounts while in your bank branch, at an ATM
or store, or through online banking, often in combination
with your Personal Identification Number (PIN) or RBC
Online Banking password. Also known as a bank card
or debit card.
Credit bureau report — Your
credit history is compiled by Canada’s central
credit bureaus. When a bank or utility considers an
application for credit or an account, it will request
the applicant’s credit report.
Credit card balance — The total
amount owing on your credit card.
Credit history — A list of facts,
gathered from financial institutions, retailers and
other lenders, about how you have handled credit in
the past. Most of this information stays in your file
for seven years. This information forms a profile of
your credit-worthiness, called your credit rating. Your
credit rating is used to help banks and other companies
to decide whether they will allow you to borrow money,
and how much.
Credit limit — The amount of
credit a financial institution will give a client. Can
also be the maximum amount a credit card company allows
someone to borrow on one credit card.
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Dealer financing — Car loans
or leasing offered directly by the car dealer, either
through the car company itself or a third-party financing
company.
Debit — Money that you’ve
authorized to be taken out of your account, such as
cheques that you’ve written, ATM withdrawals,
INTERAC®-based transactions, bill payments made
over the phone or online, pre-authorized payments and
transfers to another account.
Debit card (see Client Card).
Down payment — The amount of
your own money that you use to buy a car or home —
with the rest of the purchase price being financed.
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Fixed rate — A loan whose
interest rate is the same throughout the term of the
loan.
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INTERAC® — RBC Client Card
holders may use any ATM or direct payment machine bearing
the INTERAC symbol.
Interest rate — The rate of
return the lender receives for permitting the borrower
to use money for a specified term. The interest rate
is usually expressed as an annual rate. The compounding
frequency (for example, semi-annual compounding) will
depend on the type of loan or mortgage you select.
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Lease — An agreement under which
a person pays a monthly amount for the right to use
a specific asset, such as a car, for a specified length
of time.
Line of credit — A type of credit
that offers a person immediate access to part or all
of a pre-determined amount of cash upon demand. A line
of credit may be either unsecured or secured with personal
assets such as bonds, term deposits or equity in a home.
A secured line of credit results in a lower rate of
interest for the borrower.
Loan — An agreement under which
a borrower receives cash from a lender (often a bank)
for a predetermined length of time at a given interest
rate, generally with a stated repayment schedule. The
principal must be paid back at a specified future date.
Interim payments may consist of interest only or a blend
of interest and principal. With a fixed-rate loan, the
interest rate stays the same for the term of the loan.
With a variable-rate loan, the interest rate changes
with market rates.
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Money orders and bank drafts —
A way of making secure payment. The money order or bank
draft is purchased from the bank and issued to the vendor.
Mortgage — A loan secured by
real property, typically a home.
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N.S.F. (“Non-Sufficient Funds”)
cheque — When a cheque is written for
an amount that exceeds the funds available in the account,
the item is marked “NSF” to indicate that
there are insufficient funds. A penalty is charged for
NSF items.
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Online banking — A convenient
and secure way of making many transactions, such as
transfers and bill payments, by accessing your account
via the Internet from any computer.
Overdraft protection — By paying
a small monthly fee, you receive protection should you
become overdrawn on your account.
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Personal Identification Number (PIN)
— A password, usually four digits, created by
the user to access his or her account, in combination
with a Client Card, when making an ATM or point-of-sale
transaction.
Principal — The amount of the
loan or mortgage owed to the lender at any specified
time, not including interest.
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RBC Royal Bank Visa* card
— A type of credit card that is widely accepted
across Canada and around the world.
Rent — The amount of money,
usually paid monthly, that a tenant pays a landlord
in exchange for living accommodations.
Residual value — The value of
the car at the end of the loan or lease term.
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Security deposit — A sum of
money that a tenant gives to a landlord, on top of rent,
when he or she first moves into a rented property. The
landlord is required to return the money at the end
of the rental period and to pay interest on it annually.
Security pledge — An amount
of money equal to the amount of credit you wish to receive
on an RBC Royal Bank Visa card. The security pledge
is held by Royal Bank of Canada in case you are unable
to pay the amount owing on the credit card.
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Telephone banking — Clients
can make transactions remotely by telephone.
Term — The period of time for
which a loan, lease or mortgage agreement is in effect.
May range from several months to several years.
Trade-in — A car you own that
can be sold to the car dealer when buying a new car.
The trade-in reduces the price of the new car.
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Variable rate — A loan whose
interest rate moves up or down with changes in market
interest rates.
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*Registered trademark of Visa International
Service Association. Used under license.
The content of this website is provided
for the general guidance and benefit of our clients.
This website is for informational purposes only and is
not intended to provide specific advice. See
full disclaimer. |
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