Banking Terminologies

Important Terminologies Used in Retail Banking

Subpoena - [Latin, Under penalty.] A formal document that orders a named individual to appear before a duly authorized body at a fixed time to give testimony. A court, Grand Jury, legislative body, or Administrative Agency uses a subpoena to compel an individual to appear before it at a specified time to give testimony. An individual who receives a subpoena but fails to appear may be charged with Contempt of court and subjected to civil or criminal penalties. In addition, a person who has been served with a subpoena and has failed to appear may be brought to the proceedings by a law enforcement officer who serves a second subpoena, called an instanter.

Individual Retirement Account  - An account into which a worker makes contributions up to a certain limit throughout his/her working life, and from which he/she begins to take distributions following retirement. There are two types of IRA. A traditional IRA allows for tax deductible contributions and taxable distributions, while a Roth IRA has non-deductible contributions and tax-free distributions. The limit to annual contributions to an IRA varies each year and is indexed to inflation. IRAs are invested in securities and usually own common stock and certificates of deposit. See also: 401(k).

CD Accounts  -  Certificate of deposit (CD).CDs are time deposits. When you purchase a CD from a bank, up to $100,000 is insured by the Federal Deposit Insurance Corporation (FDIC).

You generally earn compound interest at a fixed rate, which is determined by the current interest rate and the CD's term, which can range from a week to five years.

However, rates can vary significantly from bank to bank. You usually face a penalty if you withdraw funds before your CD matures, often equal to the interest that has accrued up to the time you make the withdrawal.

Checking Account - An account at a bank in which a customer deposits money for immediate use. For example, one may utilize a checking account for one's monthly expenses, such as a mortgage payment or groceries. Because most customers keep money in a checking account for a shorter period than in a savings account, a current account pays a slightly lower interest rate. Typically, one can write a check or use a debt card on a checking account, and banks expect customers to do so. The term "checking account" is more common in the United States. In the United Kingdom, the common term is "current account."

Savings Account - An account at a bank in which the customer deposits money for any non-immediate use. For example, one may utilize a savings account to save funds for an expensive purchase, such as a house or a car. Because most customers keep money in a savings account for a longer period than a checking account, a savings account pays a slightly higher interest rate. However, the interest rate is not as high as a bond or another low-risk investment. Generally speaking, one may not write a check on a savings account without paying a penalty. This is to disincentivize withdrawals on savings.

Check - A document in which the writer orders his/her bank to pay to the receiver of the check a stated amount of money. For example, Joe may write Andrew a check for $10. In doing so, Joe is signing a document stating that he wishes to give Andrew $10, that it is available in Joe's bank, and Andrew can receive it from there. Andrew can either go to Joe's bank, present the check, and collect $10, or he may go to his own bank to deposit the check into his own account. In that case, Andrew's bank contacts Joe's bank and collects the $10 that way. Checks can be for any amount. See also: Check hold.

Safe deposit box  - otherwise known as safety deposit box [1] is an individually secured container,

usually held within a larger safe or bank vault. Safe deposit boxes are generally located in banks, post offices or other institutions. Safe deposit boxes are used to store valuable possessions, such as gemstones, precious metals, currency, marketable securities, important documents such as wills, property deeds, and birth certificates, or computer data storage that need protection from theft, fire, flood, tampering, or other perils. When renting out a safe deposit box in a bank in the United States does not mean that the property is automatically insured.[2] An individual should still purchase insurance for the safe deposit box in order to cover theft and other natural disasters.

Interest-Bearing Checking Accounts - In contrast to “no frills” accounts, these offer a more comprehensive set of services, but usually at a higher cost . Also, unlike a basic checking account, you are usually able to write an unlimited number of checks. Checking accounts which pay interest are sometimes referred to as negotiable order of withdrawal (NOW) accounts. The interest rate often depends on how large the balance in the account is, and most charge a monthly service fee if your balance falls below a preset level.

Money Market Deposit Accounts (MMDAs) - These accounts invest your balance in short-term debt such as commercial paper, Treasury Bills, or CDs. The rates they offer tend to be slightly higher than those on interest-bearing checking accounts, but they usually require a higher minimum balance to start earning interest. These accounts provide only limited check writing privileges (three transfers by check, and six total transfers, per month), and often impose a service fee if your balance falls below a certain level.

Levy -
               1. To impose an obligation to pay. For example, a government may levy a tax.

           2. To collect what is owed. For example, a creditor may levy a debt, meaning that it may collect it from the debtor.

Garnishee -

An individual who holds money or property that belongs to a debtor subject to an attachment proceeding by a creditor.

For example, when an individual owes money but has for a source of income only a salary, a creditor might initiate Garnishment proceedings. If the creditor is successful, a certain portion of the debtor's salary will be automatically sent to the creditor from each paycheck. In such case, the debtor's employer is the garnishee.

Alimony -

Payment that a family court may order one person in a couple to make to the other person when that couple separates or divorces.
The purpose of alimony is to avoid any unfair economic consequences of a Divorce, even after property is divided and Child Support, if any, is awarded. Courts set few specific guidelines to attaining this broad goal: instead of telling judges how and when to award alimony, most courts simply grant them broad discretion to decide what is fair in each case.For example, suppose two individuals who married in 1985 agree in 1995 to divorce. At the time of the divorce, the husband earns $63,000 a year, after seven years at a large company where the top pay for his specialty is $80,000. When the couple married, he was in graduate school and the wife was earning $22,000. The wife worked for three more years, supporting the husband while he completed his coursework and graduated.

Garnishment

A legal procedure by which a creditor can collect what a debtor owes by reaching the debtor's property when it is in the hands of someone other than the debtor.

Garnishment is a drastic measure for collecting a debt. A court order of garnishment allows a creditor to take the property of a debtor when the debtor does not possess the property. A garnishment action is taken against the debtor as defendant and the property holder as garnishee. Garnishment is regulated by statutes, and is usually reserved for the creditor who has obtained a judgment, or court order, against the debtor.

A debtor's property may be garnished before it ever reaches the debtor. For example, if a debtor's work earnings are garnished, a portion of the wages owed by the employer go directly to the Judgment Creditor and is never seen by the debtor.

Reserve Requirements for Depository Institutions (12 C.F.R. 204, Regulation D) is a Federal Reserve Board regulation that limits the number of preauthorized withdrawals and transfers from a savings account or money market account. The regulation applies to all United States banking institutions offering such accounts.

Finra   The Financial Industry Regulatory Authority is the largest independent regulator for all securities firms doing business in the United States. FINRA's mission is to protect investors by making sure the United States securities industry operates fairly and honestly. FINRA oversees about 4,250 brokerage firms, about 162,155 branch offices and approximately 629,525 registered securities representatives.^[2][3]
FINRA has approximately 3,400 employees and operates from Washington, DC, and New York, NY, with 20 regional offices around the country.^[4]
FINRA offers regulatory oversight over all securities firms that do business with the public, plus those offering professional training, testing, and licensing of registered persons, arbitration and mediation, market regulation by contract for the New York Stock Exchange, the NASDAQ Stock Market, Inc., the American Stock Exchange LLC, and the International Securities Exchange, LLC; and industry utilities, such as Trade Reporting Facilities and other over-the-counter operations.
FINRA was formed by a consolidation of the member regulation, enforcement and arbitration operations of the New York Stock Exchange, NYSE Regulation, Inc., and NASD. The merger was approved by the United States Securities and Exchange Commission (SEC) on July 26, 2007.^[5]

CRD   On behalf of state securities regulators, FINRA maintains the Central Registration Depository (CRD), the central database containing records for all firms and individuals involved in the securities industry in the United States.^[10]