Glossary of Terms

Definitions of most commonly used banking terms.

Bounce Protection - Bounce protection is similar to overdraft protection and provides customers a safety net to cover insufficient funds for checks and other checking account transactions. Bounce protection does not involve a contract or a monthly fee and banks have discretion over whether to offer this service to customers.

Cash Back Rewards - These types of reward programs provide consumers with a cash rebate up to a certain percentage of how much they spend. These cash rebates may range from .5 to 5 percent of their general purchases. Cash back rewards are popular because customers may spend the cash however they choose and may receive it in the form of gift certificates, checks or credits to their accounts.

Fee Income - Fee income is revenue generated by banks and financial institutions from account maintenance, overdraft and other service fees. Fee income has been restricted by the implementation of the Credit Card Accountability, Responsibility and Disclosure Act, in addition to other federal initiatives. Fees may vary by institution and smaller banks and credit unions typically charge lower fees than megabanks.

Member Privilege - Member privilege is a discretionary overdraft service that is extended by credit unions to members if their accounts are in good standing. The privilege is a courtesy service and requires no action on the part of its members. These services provide a safety net up to the assigned overdraft limit.

Mystery Shopping – A research tool that helps organizations, banks and companies measure their level of customer sales and service. Mystery shoppers do not reveal their identities and are able to gather data through the use of questionnaires, customer service inquiries, making transactions, shopping online, submitting complaints or behaving in a certain manner.

Non-Interest Income - Non-interest income is typically derived from sources that do not relate to core business products, such as loans or customer deposits. Instead, this type of revenue comes from transaction fees, insufficient funds (NSF), annual fees or monthly account maintenance costs.

Overdraft Privilege - A program that is available for eligible checking accounts in good standing. Customers may draw up a certain amount from their accounts to avoid returned checks or denied transactions. Customers may rely on overdraft privilege rather than using alternative services or credit cards. A service fee is applied when the service is used.

Reward Programs - Reward or loyalty programs provide incentives for consumers who use certain products, such as debit or credit cards. Program types vary and may include reward structures ranging from cash back and airline miles to discounts or points. These rewards may be used in a variety of locations or with participating retailers.

Reward Checking - Checking accounts typically offered by community banks and credit unions that offer higher rates for accounts if consumers meet certain qualifications each month. This may involve maintaining a certain balance and/or making a certain number of debit card transactions each month. These accounts can help consumers build wealth more quickly and maximize their income.
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