Brought to you by CFEE Canadian Foundation for Economic Education

Glossary of Some Banking Terms


Filling out a cheque correctly, and signing it, is a way to transfer money from your bank account to someone else to whom you want to make a payment or to whom you owe money.You will show, on the cheque, the person or organization that is to receive the money, how much they are to receive, and the date you are making the payment. Note that you can “post-date” a cheque. For example, if today’s date was February 13th and you didn’t want to make the payment until February 20th, you put the February 20th date on the cheque and the bank will not “cash it” and transfer the money until February 20th.


Chequing Account

To write a cheque, you must have money in a chequing account − and you must have enough money in the account “to cover” the cheque. Therefore, if you write a cheque for $128, there will need to be at least $128 in the chequing account. In some countries this type of account is also known as a Current Account. If you don’t have enough money in the account, the cheque will “bounce” − and will be returned “NSF” − which means “not sufficient funds” in the account to cover the cheque. If this happens, the person will not receive any of the money you were going to transfer and both you and the person you were going to pay, will be charged a fee.


Cheque Hold

When someone writes a cheque to you, money will be transferred from their bank account to your bank account. For this reason, when you deposit a cheque that you have received, the bank may put a “hold” on the deposit of the cheque for a number of days to make sure it can “clear” − that is, that the person who wrote you the cheque had enough money in that account to cover the payment. A hold however provides no guarantee that a cheque won’t be returned as invalid or otherwise after the hold period has expired.


Credit History

Your credit history is a record of how you have paid off past debts or loans. If you have not paid off some debts or made late payments, this will hurt your credit rating and make it more difficult for you to borrow money. It will be a record of your debts − how much you borrowed − when you borrowed − how much you still owe − and when you paid off debts. Your credit rating is made up by reports that are sent to “credit rating agencies” by organizations from which you have borrowed money in the past or still owe money. Your credit rating is used by those from whom you are looking to borrow money. It helps them to make a decision as to whether to lend you money or not. The better your credit rating, the more likely lenders will lend you money.Your credit history is held by Canada’s major credit bureaus such as Equifax and TransUnion and you can check your own credit history − which you should from time to time.


Personal Identification Number (PIN)

Your PIN is your personal number that lets you get access to your bank accounts at ABMs using your bank card. You also use it, with your bank card, to make “debit” purchases at stores and other retailers such as gas stations. Each time you use your bank card, you will be asked to enter your PIN on a key pad.This is a type of security so that others are not able to get access to your account. Protect your PIN. Do not let others see it when you enter it on the key pad.