Banking terms you need to know

Here is a list of some of the key terms you’ll want to know when it comes to making the most of your current account.
 
Account number
 
A unique number given to your bank account.
 
Available balance
 
Your available balance takes into account any pending payments, for example when you use your debit card to buy goods or services and the amount isn’t yet showing on your statement, but excludes any cheques that haven’t yet cleared. From 24 November 2019, it does not include any arranged overdraft limit. 
 
ATM
 
You can use automated teller machines (ATMs) to:
  • withdraw cash from your account
  • pay in cheques
  • pay bills
  • get statements
Using an ATM is usually free. Make sure you read the signs on the machine closely to double check you won't be charged a fee.
 
Balance
 
Your current account balance is the amount you are either in credit or in debit (overdrawn).  This balance may include transactions that are still being processed.  It does not include any arranged overdraft limit. 
 
Basic bank account
 
This type of account offers the ability to:
  • send money
  • withdraw cash
  • set up standing orders
  • set up Direct Debits

However, basic bank accounts do not offer connected overdrafts.

BIC
 
This stands for Bank Identifier Code and is a number that identifies your bank. It's needed if you want to send or receive money from outside the UK. If you bank with HSBC, you'll find your BIC on your bank statement.
 
Credit
 
Your account is credited when money is paid into it. Credit is the amount of money you have available in your bank account.
 
Debit
 
Your account is debited when money is withdrawn from it. When your account is in debit it is overdrawn.
 
Debit card
 
You can use this type of card to make cash withdrawals from ATMs, as well as to pay for goods and services in person, online or over the phone. When you use your debit card, the amount of the transaction is debited from your current account.
 
Deposit
 
Money paid into your account.
 
Direct Debit
 
A payment from your bank account to another account on a date or dates agreed by yourself and the recipient. Unlike a standing order, the amount paid by a Direct Debit can be changed by the recipient, but they have to give you notice of this.
 
EAR
 
EAR stands for Equivalent Annual Rate. It shows the rate you would pay on your overdraft if interest was charged annually on the amount you owe. It doesn't take into account any fees.
 
Financial Conduct Authority (FCA)
 
This is the body that regulates the financial services industry in the UK, including banks and building societies. The FCA's role is to protect customers and promote healthy competition.
 
IBAN 
 
This stands for International Bank Account Number. It identifies accounts held at any bank in any country. If you're an HSBC customer, you'll find your IBAN on your bank statement.
 
Joint account
 
An account held by more than one person.
 
Arranged Overdraft
 
Most current accounts allow you to apply for an arranged overdraft. This is a way of the account provider and you agreeing in advance that you may borrow money when there is no money left in your current account. The arranged overdraft limit - which is the maximum amount that can be borrowed - is based on your credit rating and how much you can afford. There will usually be a cost for using an arranged overdraft in the form of interest or sometimes fees.
 
Payee
 
The company or person you're paying.
 
Pending transactions
 
Payments or deposits you've made - for example, by cheque or debit card - that haven't yet cleared or been debited to your account.
 
Recurring transactions
 
Also known as a recurring payment or a continuous payment authority (CPA). This is a payment you've agreed that a business can take from your debit or credit card when needed. Recurring payments are different from Direct Debits and standing orders because your instruction is with the business, not the bank. They can vary in amount and frequency.
 
Sort code
 
This is a six digit code that identifies your bank branch.
 
Standing order
 
A regular payment you make from your bank account. Unlike Direct Debits, the amount paid by a standing order is fixed, and you're the only one who can change it.
 
Statement
 
Your bank statement shows all the transactions that have taken place over a set period of time. It also shows any interest or fees that have been added to or deducted from your account. You can access your bank statements online, or have paper statements sent to you by post.
 
Transfer
 
When you send money between your own accounts, for example from a current account to a savings account.
 
Withdrawal
 
Taking money out of your account.