Bank Offers glossary of terms

Definitions of banking, deposit insurance, and bonus-related terminology used across this site, alphabetized for quick reference.

The vocabulary of consumer banking and bonus pursuit borrows from a handful of overlapping domains: deposit insurance, payment systems, tax reporting, and consumer reporting. The list below covers terms that appear regularly across this site, kept short and practical.

ACATS (Automated Customer Account Transfer Service)

The industry-standard mechanism for transferring brokerage accounts between firms. The receiving brokerage initiates; the sending brokerage validates and releases. Typically settles in 5–10 business days for standard transfers.

ACH (Automated Clearing House)

The US electronic-payment network for batch credit and debit transfers between bank accounts. Direct deposits, bill payments, and many P2P services move over ACH. Entries are coded by Standard Entry Class (SEC) — PPD for payroll, CCD for corporate, and several others.

APR (Annual Percentage Rate)

The yearly rate of interest on a loan or borrowing product, expressed without compounding. Used most often in lending contexts; for deposits, APY is the more relevant measure.

APY (Annual Percentage Yield)

The effective annual return on a deposit account, expressed with compounding included. The standardized comparison metric for savings, MMA, and CD products under federal Truth in Savings rules.

Beneficial Owner

An individual who directly or indirectly owns 25% or more of the equity interests of a legal-entity customer. Banks must collect identification information for each beneficial owner of a business-account customer under the FinCEN CDD rule.

CDD Rule (Customer Due Diligence)

FinCEN regulation requiring banks to identify and verify beneficial owners and a control person for legal-entity customers as part of business account opening.

ChexSystems

Consumer reporting agency owned by FIS that tracks deposit-account history (closures, unpaid fees, suspected fraud). Used by most banks during new-account decisions. Subject to FCRA, so consumers have annual free-disclosure and dispute rights.

Compound Interest

Interest calculated on both the principal and accumulated interest. Compounding frequency (daily, monthly, quarterly) affects APY.

Custodial Account

An account held by an adult on behalf of a minor (often under UTMA/UGMA). The custodian manages the account; the assets legally belong to the minor and transfer to them at the age of majority.

Direct Deposit

An ACH credit posted to an account, typically defined for bonus-qualification purposes as a payroll-coded or government-benefit-coded credit. Banks vary widely in what they accept as direct deposit; see our direct deposit guide.

Dormancy

A bank's classification of an account with no member-initiated activity for a stated period. Dormant accounts may be subject to monthly fees and may eventually be escheated to the state as unclaimed property.

EDIE (Electronic Deposit Insurance Estimator)

The FDIC's online tool at edie.fdic.gov for calculating insurance coverage on a specific deposit structure at a specific bank.

Effective APY

The actual APY realized on an account given the actual balance held and the actual time period — distinct from the headline APY when balance tiers or promotional periods apply.

EWS (Early Warning Services)

A separate consumer reporting agency for deposit-account history, used by some banks alongside or instead of ChexSystems. Also subject to FCRA.

FCRA (Fair Credit Reporting Act)

Federal statute governing consumer reporting agencies including ChexSystems, EWS, and the three major credit bureaus. Establishes rights to disclosure, dispute, and accuracy.

FDIC (Federal Deposit Insurance Corporation)

Independent federal agency that insures deposits at participating US banks. Standard coverage is $250,000 per depositor, per insured bank, per ownership category, made permanent by Dodd-Frank in 2010.

Field of Membership

The defined population eligible to join a particular credit union — typically based on employer, geography, association, or family relationship.

Form 1099-INT

IRS form used to report interest income from a payer to a recipient. Banks file when total interest paid to a recipient in a year reaches $10 or more. Some banks use this form for cash bonuses categorized as interest.

Form 1099-MISC

IRS form used to report miscellaneous income. Banks file when miscellaneous payments to a recipient reach $600 or more in a year. Many banks use this form for cash sign-up bonuses and brokerage transfer bonuses.

HYSA (High-Yield Savings Account)

A savings account paying a competitive APY, typically offered by online or challenger banks with lower overhead than legacy institutions. FDIC-insured up to standard limits.

IRA — Traditional

Individual Retirement Arrangement allowing pre-tax contributions (subject to income limits and employer-plan coordination) and tax-deferred growth. Distributions in retirement are taxed as ordinary income.

IRA — Roth

IRA funded with after-tax contributions, with tax-free qualified distributions in retirement. Subject to income limits on direct contributions.

IRA — SEP

Simplified Employee Pension IRA, used primarily by self-employed individuals and small businesses. Funded by employer contributions only.

IRA — SIMPLE

Savings Incentive Match Plan for Employees IRA, used by small employers. Funded by both employer and employee contributions, with a two-year rule on transfers out of the SIMPLE IRA.

Joint Account

An account with two or more owners, each with equal withdrawal rights. For FDIC purposes, each co-owner's interest is insured up to $250,000.

Liquidity

The ease with which an asset can be converted to cash without loss. Checking accounts are highly liquid; CDs are not (until maturity, absent penalty).

MMA (Money Market Deposit Account)

A bank deposit product paying yield comparable to a HYSA, often with limited check-writing or debit access. FDIC-insured. Distinct from a money market mutual fund, which is a securities product.

NCUA (National Credit Union Administration)

Independent federal agency that charters federal credit unions and administers the NCUSIF.

NCUSIF (National Credit Union Share Insurance Fund)

The federal share insurance fund for federally-insured credit unions. $250,000 per share-owner, per credit union, per ownership category. Equivalent in coverage to FDIC.

NSF (Non-Sufficient Funds)

The condition of an account lacking funds to cover a presented item. Often triggers fees and may be reported to ChexSystems for repeated incidents.

Opportunity Cost

The value of the next-best alternative use of a resource. For bonus-pursuit, the yield foregone by holding qualifying funds at the bonus bank instead of in a benchmark account.

Ownership Category

The FDIC's classification of a deposit by owner structure (single, joint, retirement, revocable trust, irrevocable trust, business, government). Each category is separately insured to $250,000 at the same insured bank.

P2P Transfer

Person-to-person electronic transfer (Zelle, Venmo, PayPal, Cash App, etc.). Often explicitly excluded from "direct deposit" definitions on bank bonuses.

PPD (Prearranged Payment and Deposit)

The ACH SEC code commonly used for employer payroll, government benefits, and similar recurring credits. Most "true direct deposit" definitions look for PPD-coded entries.

Qualifying Deposit

A deposit meeting all the requirements stated in a bonus offer (source, amount, timing). Must be verified against the specific bank's published criteria.

Regulation D (savings transaction limit)

The former federal rule limiting certain savings-account withdrawals to six per month. The federal limit was removed in April 2020 via an interim final rule by the Federal Reserve; banks may still apply voluntary limits.

Revocable Trust

A trust the grantor can modify or revoke. POD (payable on death) and ITF (in trust for) designations on a deposit account create revocable-trust treatment for FDIC purposes, potentially extending coverage based on eligible beneficiaries.

Rollover (60-day rollover)

A retirement-account transfer in which the funds pass through the account-owner's hands before being deposited in the receiving account, within 60 days. Subject to the once-per-12-months rule and 20% withholding traps. The trustee-to-trustee transfer is the cleaner alternative.

Sweep Account

An account that automatically moves balances above or below a threshold to a linked higher-yield or lower-yield account. Common in brokerage products and some business banking offerings.

Tiered Rate

An APY structure that pays different rates at different balance levels. Read the tier table — the headline rate often applies only to a specific tier, not the full balance.

Trustee-to-Trustee Transfer

A retirement-account transfer in which the assets move directly between custodians without the account-owner taking possession. Not subject to the 60-day rollover rule's restrictions and not a taxable event when both accounts are the same IRA type.

Truth in Savings Act

Federal statute (Regulation DD) standardizing the disclosure of yield (APY), fees, and terms on deposit accounts. The reason APY rather than nominal rate is the headline number on US deposit products.

Wire Transfer

An electronic transfer of funds settled in near-real time over Fedwire or CHIPS. Faster than ACH, typically more expensive, and not usually accepted as "direct deposit" for bonus purposes.

Yield Curve

The relationship between rates and term length. Normally upward-sloping (longer terms pay more); sometimes flat or inverted (shorter terms pay more than longer ones). Affects whether CD ladders and similar structures make sense.