Loyola University Chicago

Financial Aid Office

Banking Basics

As a student, you might be interested in opening your first checking account or adding a savings account. We're here to help you understand the differences between financial institutions, the types of products offered, and some terminology that you'll need to understand in order to understand your finances.

For-Profit Not-for-Profit
FDIC Insured ($250K) NCUA Insured ($250K)
Shareholder Owned Member Owned
Anyone Can Join Affiliation Required
More Products Fewer Products
More Accessible Less Accessible
More Fees, Worse Rate Fewer Fees, Better Rates

Financial Products

  • Checking Account - An account that is accessible anytime to deposit funds and withdraw them. May require paychecks to be direct deposited in order for the account to be free, unless it is a student account).
  • Savings Account - An interest-bearing account that may require a minimum balance and could limit the number of withdrawals/transfers each month.
  • Money Market Account (MMA) - A type of savings account with higher interest rates, but also a higher minimum balance required.
  • Certificate of Deposit (CD) - An interest-bearing account with higher interest than typical savings accounts and a date of maturity (i.e. money cannot be withdrawn before this date without penalty).
  • Credit Card - A card that allows you to borrow from the financial institution. There is no interest charged so long as the amount is paid back within the 25-30 day grace period after the statement is issued.


  • Annual percentage rate (APR) - The amount of interest you gain from keeping money in an account in a year, not including compound interest.
  • Annual Percentage Yield (APY) - The amount of interest you gain from keeping money in an account in a year, including compound interest.
  • Automated Teller Machine (ATM) - A machine that can process a variety of banking transactions such as deposits and withdrawal. There may be a limit to the number of withdrawals or the amount that you can make in a day.
  • Automatic Bill Pay - A checkless system for paying recurring bills with a one time authorization statement.
  • Available Balance - The balance of an account minus any pending transactions.
  • Available Credit - The difference between the credit limit of a credit card and the current balance on the card.
  • Balance Transfer - The process of moving an outstanding balance from one credit card to another. This is usually done to obtain a lower interest rate on the outstanding balance, but is typically subject to a Balance Transfer Fee. 
  • Cashier's Check - A check drawn on the funds of the bank, rather than the depositor's account, but paid for by the depositor. The primary benefit of a cashier's check is that the recipient of the check is assured that the funds are available.
  • Compound Interest - Interest that applies to the original deposit as well as any newly earned interest. If you put $100 in an account that earns compound interest at 5% a year, in the next year you will earn 5% on $105.
  • Debit Card - A card that allows the account owner to access their funds electronically. If you enter your 4-digit pin number when making a purchase, the funds are subtracted from your account immediately.
  • Deposit - A sum of money placed or kept in a bank account.
  • Direct Deposit - An electronic transfer of a payment directly from the account of the payer to the recipient's account. For example, your employer may directly deposit your pay into your bank account, with your permission.
  • Foreign Transaction Fee - A fee assessed by your bank for making a transaction at another bank's ATM.
  • Joint Account - An account owned by two or more persons. Anyone listed on the account can deposit and withdraw funds.
  • Minimum Balance - The amount of money required to be on deposit in an account to qualify for special services or to waive a service charge.
  • Minimum Payment - The minimum dollar amount that must be paid each month on a loan, line of credit, or other debt.
  • Overdraft Fee - A fee incurred when your checking account doesn’t have enough funds to cover a payment that is requested. The financial institution will pay what your account lacks, after which your account may have a negative balance.
  • Personal Identification Number (PIN) - A 4-digit number used as a code to access accounts.
  • Returned Item Fee - A bounced-check fee charged to the person trying to deposit the check. It can be charged if there are insufficient funds in the check writer’s account or if the account is closed.
  • Routing Number - A nine-digit number that identifies your financial institution.
  • Service Charge - A charge assessed by the financial institution for processing transactions and maintaining accounts.
  • Statement - A summary of all transactions that occurred over the preceding month and could be associated with a deposit account or a credit card account.
  • Stop Payment - An order not to pay a check that has been issued but not yet cashed. Most banks charge a fee for this service.
  • Wire Transfer - A transfer of funds from one point to another by wire or network.