Unit 9

Intermediate 1
Vocabulary about banking
1. Account
You can have a checking account and a savings account. The checking account allows you to
take out money anytime you want. The savings account (current account) allows you to save
money and also earn interests
Example:
“He needed to transfer some money from his savings account to his checking account so that he
could pay for the new car he wanted to buy.”
2. Credit
Credit is the money you receive in your bank account or the money a bank lends you. Credit can
also refer to the financial reputation (background or record) you have when you’re considering
borrowing money from a bank. A credit card is a card that allows you to spend more money than
you have, but then you have to pay interest. The word credit can also be used in a general sense:
When you give someone credit, you acknowledge their efforts or worth.
Example:
“His credit was good, so he didn’t expect the bank to reject his loan application.” nightmare
3. Debit
This is money taken out of your bank account or money you owe. A debit card allows you to use
the money in your account by paying in stores or online. You can also use this card by
getting money from a cash machine or ATM (see below). In addition, you can use this word as a
verb: To debit money means to take out money from an account.
Examples:
“I prefer using a debit card, because I’m not tempted to spend more money than I have in my
account.”
“The bank debited the money from his account.”
4. Balance
Your balance is the money you have in an account. This is the difference between what you
spend (debits) and what you receive (credits).
Example:
“I need to check my balance before completing the transaction (exchange).”
5. Loan
A loan is money you borrow from a bank or another institution or person. The
bank lends (gives) you the money, and you borrow (receive) it. The bank is the lender, and you
are the borrower.
Example:
“They needed a loan to buy the car of their dreams, but they couldn’t find a lender.”
6. Student Loan
Student loans are loans that are used by borrowers to pay for education fees. Students loans are
supposed to be paid back once the borrower finishes studying and starts working. Some lenders
offer student loans at lower interest rates (see below).
Example: “You need to get a good job right after you graduate, or you’ll be paying for
your student loan for a long time.”
7. Debt
A debt is a sum of money that’s owed. You can also use the word in a general way: If you are in
debt to someone, it can mean you owe them a favor or are grateful for something.
Example:
“He couldn’t pay his debt, so he had to sell his car.”
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8. Interest Rate
If you borrow money from a bank, you’ll need to pay it back. In addition to this, you’ll need to
pay interest.  The amount of interest is decided by an interest rate, which is calculated for a
given period of time. If you have a savings account, the bank will pay you interest for being able
to use your money over a certain period of time.
Example:
“He was researching the banks that offered the lowest interest rate for loans.”
9. To Withdraw
To withdraw money is to remove money from an account.
Example:
“He wanted to withdraw some money from his checking account, but he forgot his card at
home.”
10. To Overdraw
To overdraw is to try to withdraw more money than you have in your account. In this case, you
generally have to pay some extra fees. It’s advisable (a good idea) to pay attention to your
balance so you don’t overdraw money.
Example:
“He was careful not to overdraw money from his account, because the penalties are quite high
with his bank.”
11. Overdraft
This is money that you withdraw from your account when you no longer have available funds.
This is like a loan the bank gives you.

Example:
“She received an overdraft  notice when she spent more than she had in her checking account.”
12. ATM
ATM stands for Automated Teller Machine, which is a machine that helps you make bank
transactions just by using your card. The word teller refers to the bank clerk who helps you with
transactions. Cash-point or cash machine are also used.
Example:

“I need to stop at the ATM to take out some cash.”

13. Direct Debit

This is an arrangement to make regular payments of different amounts, usually for utilities
(services like electricity and water) or credit card bills. By using direct debit, you avoid having to
make monthly transactions.
Example:
“He used a direct debit for his mobile phone bill.”
14. Standing Order
This means an arrangement to make regular, fixed payments automatically from one’s
account. Standing orders are different from direct debits because the amount paid cannot vary
(change).
Example:
“He kept forgetting to pay his loan installments so he decided to go for a standing order.”
15. Deferred Payment
A deferred payment is a payment that’s postponed (put off) for a later date because you cannot
complete the transaction when you would normally complete it.
Procrastinator: a person who put off everything

Example:
“He was going abroad for a month, so he decided to use deferred payment for his electricity
bill.”
16. Statement
A bank statement is a list of all the transactions that happened in a bank account over a certain
period of time. It shows all the debits, the credits and the balance.
Example:
“He wasn’t sure why his balance was so low, so he asked for a bank statement.”
17. Personal Identification Number (PIN)

This is a secret combination of numbers that only account holders can use to access their
accounts.

Example:
“After three failed attempts to remember his Personal Identification Number, he had to contact
the bank.”
18. Safety Deposit Box
A safety deposit box is a safe that the bank rents for people to store their valuable items.
Example:
“After having his house broken into twice, he decided to keep his important documents in
a safety deposit box.”
19. Credit Limit
Your credit limit is the maximum amount of money a bank will let you borrow based on your
financial situation.
Example:
“After she reached her credit limit, she decided to spend less and save more.”
20. Mortgage
A mortgage is an agreement by which someone can borrow money from a bank to buy a house.
The bank becomes the owner of the house until the debt is paid up.
Example:
“They need to take out a mortgage to buy a house.”
21. Collateral
This is something, like a house, that’s used as a guarantee (assurance or backup) when taking out
a loan. If the borrower cannot pay the debt, the bank becomes the owner of the collateral.
Example:
“She didn’t have any collaterals, so she decided to take out a mortgage.”
22. Appraisal
Appraisal is the evaluation of the value of a property, usually done by a bank representative. An
appraisal is usually carried out before taking out a mortgage.
Example:
“They wanted to use their house as collateral for the loan, but first the bank needed
to appraise its value.”

23. Guarantor
A guarantor is a person who agrees to pay for someone else’s debts, if this person cannot pay.

Example:
“His parents offered to act as guarantors for his student loan.”
24. Payoff

This is the complete payment of a loan.

Example:
“She was feeling relieved that she had completed the payoff of her debt last month.”
25. Clause
A clause is a part of a contract that gives details about a certain situation that’s covered by the
contract.
Example:
“All the bank contracts have a clause that specifies the bank charges and the interest rate for a
specific account.”
26. Prepayment
Prepayment is settlement of a debt before the due date. Sometimes there
are prepayment penalties that banks charge in this case.
Example:
“She forgot to check the prepayment clause and was quite surprised to see she had penalties to
pay to the bank.”
27. Bank Charges
Bank charges are all the fees a bank requires you to pay in exchange for its services (using a
credit or a debit card, making transactions, taking out loans). Bank charges can also be referred
to as commissions.
Example:
“He chose his bank carefully, by looking not only at the interest rates, but also at all the bank
charges.”
28. Business Days
Business days are days on which a bank or business is open. Similarly, business hours refers to
the hours when a bank or business is open.
Example:
“You can only complete transactions in the bank on business days, but you can use Internet
banking (see below) whenever you want.”
29. Branch (headquarter)
A branch is a location where a bank offers services to customers.
Example:
“This bank only has three branches in the city, but there are plenty of ATMs.”
30. Electronic Banking
Electronic banking is a system that allows customers to complete banking transactions on the
Internet. It’s also called online banking, Internet banking or e-banking.
Example:
“Customers find electronic banking very convenient because they no longer need to go to the
bank to make transactions.”
Multiple Choice Vocabulary Exercise

Now have a look at this vocabulary exercise and test yourself! Choose the right word from the
three options provided.

1. She decided to open a ___ account at the bank that offered the best interest rate available on
the local market.

A. saving / B. savings / C. saved

2. If you’re not sure your ___ is correct, you should ask for a bank statement.

A. balance / B. total amount / C. money

3. She preferred using a ___ card rather than a credit card because she sometimes had a tendency
to spend too much.

A. debited / B. debit / C. debitable

4. Avoid ___ money from your account by keeping track of your transactions online.

A. withdrawing / B. overdrawing / C. removing

5. He realized that paying all his utility bills was taking way too long, so he decided to give ___
debit a try.

A. direct / B. standing / C. straight

6. He forgot to make arrangements for ___ payment while he was abroad, so he was worried he
would have his electricity cut off.

A. delayed / B. postponed / C. deferred

7. Having a credit ___ is a good way to limit the effects of credit card fraud.

A. limitation / B. limit / C. measure

8. If she had known about the penalties, she wouldn’t have considered ___ such a good option.

A. advance payment / B. prepayment / C. early payment

9. As he didn’t have any collaterals, he needed a ___ to take out a loan.

A. guarantor / B. guarantee / C. warranty

10. You may find yourself in the unpleasant situation of having to pay a lot of bank ___ if you
don’t research banks carefully before taking out a loan.

A. taxes / B. tariffs / C. charges

11. As they didn’t want to live in a rented apartment, their only option was to ___ a mortgage.

A. take away / B. take up / C. take out

12. The interest ___ wasn’t the best on the market, but she chose that bank because it had been
recommended to her by her parents.

A. rate / B. rating / C. level