If you’d like to take control of your financial future and increase your savings potential, familiarize yourself with these banking product terms. These basic banking terms can help you better understand online banking and manage your finances. The more informed you are about online banking terms and products, the better chance you have for financial success. Also check out our financial glossary.
Borrowing terms and products
Annual percentage rate (APR) refers to the interest rate you’re charged each year for the use of a loan or line of credit. The APR you qualify for is usually based on your creditworthiness and the terms of agreement for the loan or line of credit you are seeking. A loan with a low APR is ideal.
Home equity loan
Typically, a home equity loan allows you to borrow an amount of money equal to or less than the equity you have in your home. For example, if the value of your home is $250,000, and you still owe $150,000 on your mortgage, you may not borrow more than the difference of $100,000.
Some lenders do not offer 100% LTV (loan to value), so check with your financial institution for the details of your mortgage agreement. A lump-sum home equity loan may be best suited for major purchases, to consolidate your bills or reorganize your finances.
Home equity line of credit
In addition to a home equity loan and other credit options, a good credit history can help you qualify for a home equity line of credit, or HELOC. Your credit line can be used for anything, like financing an education, making home improvements or paying for car repairs.
Rather than the lump sum that you get with a home equity loan, a home equity line of credit is a revolving line of credit, similar to a credit card.
As one of the most popular forms of credit, a credit card allows customers to spend up to a predefined credit limit. Interest on a credit card balance is not assessed until the end of the term, so a smart credit card management technique is to pay off your balance each month to avoid a fee.
Auto loans allow customers to buy a vehicle with a bank loan, then pay off the loan over time. Using an auto loan is more expensive than buying a car outright since you usually have to pay interest on the principal, but you get use of the car while you’re paying for it.
Mortgage loans come with several financing options, including fixed or adjustable rate (ARM), and term lengths that commonly range from 10 to 40 years. The interest rate on a fixed rate mortgage will not change during the life of your loan, while a variable or ARM rate can fluctuate depending on a public rate index.
Your Nationwide Bank mortgage representative will be able to offer advice on which options work best for you.
Deposit terms and products to know
Annual percentage yield (APY) refers to the interest rate you earn on the money you deposit with a bank. Generally speaking, the higher the APY, the more savings you’ll accrue over time. Deposit accounts are FDIC-insured up to $250,000 per depositor.
A checking account gives you easy access to your money to manage your day-to-day expenses. In addition to providing access to your account and funds in person, by phone, through mail, check, debit card and via ATM, most major banks also offer free online banking. In most cases, you can view your account history, and sign up for convenient features, such as automatic bill pay.
A savings account usually requires a low minimum balance and offers a lower APY on your money compared to other deposit products. This type of account is ideal if you have money to set aside and earn interest but want to maintain easy access to the funds.
Money market account
Also known as a money market deposit account, a money market account requires a larger minimum opening and daily balance but typically yields a higher return on your money than other deposit products. Because of the minimum balances usually required by this account, it is most useful if you have a large sum of money that you would like to earn interest on and can afford to set aside, but still want to retain access to in case of an emergency.
Certificates of deposit (CD)
This type of savings product generally offers a higher APY than the products listed above. However, when you put your money in a CD, you agree to leave it alone for a set term length, usually between six months and five years. If you do need to withdraw funds before the deposit has reached maturity, you’ll likely pay a penalty.
Although CDs require a higher minimum balance than traditional savings accounts, they can be a good choice if you want to set aside funds for an occasion or purchase a few years down the road, and would like your deposit to accrue interest in the meantime.
Nationwide Bank products
We’re proud to offer attractive rates and features on all of our banking products. From competitive home equity rates to a variety of deposit and loan products, we have the tools you need to reach your financial goals.
Browse our products today and open an online banking account, get an attractive rate on a home equity loan or learn more about the many banking options available to help you grow your money.