Brex Learning Center

Glossary

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Account Agreement

An account agreement is a contract governing an open-end credit account. It outlines the rights and responsibilities of both the holder and the bank. The account is not activated until the customer has read, agreed upon, and signed the contract. For joint accounts, all parties involved must sign the account agreement.

Account History

Account history is a summary of all the activity within a bank or credit account over a specified period. This includes a record of transactions, the number of times the account was over limit or past due, as well as passive entries such as interest earned on the balance. Banks send monthly statements to holders of checking, savings, and brokerage accounts.

Account Holder

An account holder is any person that the bank has designated and authorized to transact business on behalf of an account. The signature of each account holder must be on file with the bank, as this entitles that individual to conduct business on behalf of the account.

Accrued Interest

Accrued interest is the amount of accumulated interest on a bond or other fixed income security that is payable or receivable, but has not yet been paid or received. It is calculated monthly or yearly for corporate and municipal bonds, or on actual calendar days for government bonds. Sellers receive the accrued interest along with the market price on the sale of a bond.

Amortization

Amortization refers to the process of reducing debt by making regular and equal installment payments, resulting in the payoff of a loan at its maturity. Each of these periodic payments includes the principal and interest. As the interest repayments reduce over time, the amount of the payment applied to the principal increases.

Annual Percentage Rate (APR)

The annual percentage rate (APR) is the annual cost of credit on a yearly basis, which is expressed as a percentage. It represents the actual yearly cost of borrowing funds over the term of a loan. It is useful for borrowers who want to compare loan programs from different lenders. APR generally includes pre-paid interest, additional costs and fees, such as the loan-processing fee, underwriting fee and document preparation fee. It does not take compounding into account.

Automated Clearing House (ACH)

The automated clearing house (ACH) is an electronic funds-transfer network that connects financial institutions. The ACH system facilitates the inter-bank clearing of transactions between member depository institutions. In the U.S., the self-regulating NACHA institution runs the ACH. The system processes payments such as direct deposits, payroll, bank transfers, consumer bills, tax payments, and many other payment services.

Automatic Payment

An automatic payment is a checkless system for paying recurring outgoings, such as a monthly cable bill for example. The customer only needs to provide the bank with one authorization statement to set up automatic payments. An Automated Clearing House (ACH) makes the necessary regular debits and credits. The customer can choose to stop or postpone the automatic payments at any time.

Available Balance

Available balance is the amount of funds that are immediately available to a customer in their checking, saving, or on-demand account to use for transactions. This balance may differ to the account's stated total funds, as it is less any uncollected funds, holds, or restrictions against the account. Some banks will also include checking account cash reserve in the available balance. If an issuing bank has not cleared a check deposit, then the funds will not be available to the account holder.

Available Credit

Available credit is the amount of credit that is available for a customer to use for purchases on a revolving credit account. It is the difference between the total credit limit assigned to a cardholder's account and the present account balance. Available balance is a key factor in credit score calculation. A reasonable amount of available credit shows that a customer has been able to obtain credit lines in the past and that they have the discipline to not use all the available credit on purchases.

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