15 Important Banking Terms You Need To Know

Banking terms can be hard sometimes, understanding these banking terms will make it easier for you. Here are some banking terms that you should know.

NEFT (National Electronic Funds Transfer)

NEFT is an electronic means to transfer money from one bank to another or within the same branch.

Base Rate

Base rate is the minimum rate at which a bank can lend to its customers. It cannot lend below the base rate. All interest rates determined for various loans will use the base rate as the benchmark.

Credit Score

Credit history is the behavioral pattern of a customer with regard to loans. A credit bureau will collect the information of a customer and then translate it to a number between 300 and 900. This is also known as your credit score. Better credit score increase your chances of availing a loan or a credit card.

Fixed Interest Rate

Fixed interest rate means the rate of interest for a loan remains constant throughout the entire tenure.

Floating Interest Rate

Floating interest rate means the interest rest changes during the tenure of a loan. It changes as per the changes of interest rates in the economy.

Simple Interest

Simple interest is the interest earned on a deposit.

Compound Interest

Compound interest is the interest earned on the deposit plus the interest earned on the same deposit previously.


Collateral is the security or guarantee that a borrower must provide to the lender to get a loan. Some common examples of collateral or security are property, gold, investment securities.


The CVV (Card Verification Value) on credit or debit cards is a 3-digit code at the back of VISA, MasterCard and Discover branded credit and debit cards, and a 4 digit code on American Express credit and debit cards.


POS is the short form for Point of Sale, and usually refers to a retail outlet.

Sweep-in Facility

The Sweep-in facility allows you to enjoy the high interest rates that come with a Fixed Deposit and the liquidity of a Savings Account.


The Sweep-out facility allows you to transfer money from your savings account into a fixed deposit or vice-versa. You can do this via a standing instruction, if the money in the account goes above or falls below a limit you have decided upon.


TDS means Tax Deducted at Source. TDS is certain percentage of payment that is collected by the entity making a payment and deposited with the tax authorities.


It stands for Electronic Clearing Service. It is a mode by which funds are automatically debited to your account every month to pay recurring bills or fees. ECS is activated by giving standing instructions to the bank.


CertiCard is used for the packaging of gold bars and precious stones. It is a tamper-proof security case with two levels of protection or seals. It is a means to guarantee the authenticity of the product it holds.

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4 thoughts on “15 Important Banking Terms You Need To Know

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