Glossary and Key Banking Terms | President's Choice Financial

Glossary

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Here's a handy list of definitions for some of the terms we use, written in plain and simple language.

Select a letter below to see an alphabetical listing of terms and their definitions.

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

A

Automated banking machine (ABM)

A bank machine is sometimes referred to as an automated teller machine (ATM). With your President's Choice Financial® bank card or President's Choice Financial® MasterCard®, you have immediate access to any President's Choice Financial or CIBC bank machine.

President's Choice Financial bank machines are located in participating supermarkets, while CIBC bank machines displaying the Interac logo can be found virtually anywhere in Canada.

go to Find a President's Choice Financial or CIBC bank machine.


Amortization

The amount of time (usually set out in months or years) it will take to pay off a jump to loan

Appraisal

An appraisal is a determination of the value of a property for lending purposes. A lender usually requires an appraisal and is charged a fee by the appraiser, which the lender may require the borrower to pay.

Asset

Everything a business or person owns or is owed, such as money, securities and property (for example, equipment and buildings).

Asset mix

The weighting of assets in an investment portfolio among different jump to asset classes (e.g. shares, jump to bonds, property, cash, overseas investments).

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B

Bank card

Also known as a debit card, it is a card used instead of cash to pay for purchases. Once you approve the transaction by entering your PIN, the amount is debited (deducted) from your account and paid to the merchant or retailer. A bank card can also be used to make cash withdrawals and perform other transactions at bank machines.

Bank draft

A guaranteed form of payment that is issued by a bank.

Bond

A certificate that evidences a debt.  The issuer of the bond promises to pay the holder jump to interest on the debt for a specified length of time, and to repay the debt on its maturity. Bonds are issued by corporations and by federal, provincial and municipal governments. Bond holders are first in line before shareholders to claim any of a company’s assets in the event of liquidation.

Bank Machine

A bank machine, sometimes referred to as an automated teller machine (ATM). With your President's Choice Financial® bank card or President's Choice Financial® MasterCard®, you have immediate access to any President's Choice Financial or CIBC bank machine.

President’s Choice Financial bank machines are located in participating supermarkets, while CIBC bank machines displaying the Interac® logo can be found virtually anywhere in Canada.

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C

Canada Savings Bonds

A jump to bond issued each year by the federal government. These bonds can be cashed in at any time for their full face value.

Closing Costs

When buying or selling a home, closing costs are transaction costs that are payable by the home buyer or seller in order to complete the transaction. For example, a home buyer's closing costs usually include land transfer taxes, and legal fees and disbursements.

Co-borrower

Any additional borrower whose name appears on loan or line of credit documents and whose income is used to qualify for the jump to loan or jump to line of credit.Under this arrangement, the borrower and all co-borrowers have an obligation to repay the loan or line of credit.

Collateral

A pledge of property or other jump to assets by a customer who is borrowing from a financial institution. Financial institutions may require collateral as security in the event that the customer defaults on his/her jump to loan.

Compounding

When an jump to asset generates earnings that are then reinvested and generate their own earnings.

Credit

On your bank statement, 'credit' represents funds that you have deposited into your account. The opposite of a credit is a jump to debit.

However, ‘credit' also means money that you borrow from a financial lender, like a bank. A credit card, for example, is a card that allows you to access funds which you then have to repay. If you repay more than you owe, the excess amount will appear as a “credit balance” on your credit card statement.

Credit bureau

An organization that stores and maintains information about your borrowing and repayment habits in a detailed credit report. A credit report can contain information such as personal identification, your credit history, public records with an effect on your credit and a list of parties you have authorized to access this information. The purpose of this credit report is to establish a standardized and objective credit rating for you.  Lenders use credit reports to decide whether or not you qualify for a jump to loan or jump to credit card.

Credit card

A revolving source of jump to credit with a pre-established limit. Other than during the jump to interest-free grace period for new purchases, you have to pay jump to interest on a credit card if you have an outstanding balance.

D

Debit

Funds which have been deducted from your account. The opposite of a debit is a jump to credit.

Debit card

A card used instead of cash to pay for purchases. Once the transaction is approved, the amount is jump to debited (deducted) from your account and paid to the merchant or retailer.  A debit card can also be used to make cash withdrawals and perform other transactions at jump to ABMs.

Direct deposit

An amount deposited directly into a bank account. For example, you can arrange with your employer to have your pay cheques automatically deposited into your President’s Choice Financial no fee bank account as a direct payroll deposit.

Diversification

Spreading investment to reduce jump to risk by buying different securities from various companies, businesses, locations and governments.

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E

Earned income

Earned income is generally an individual's salary or wages from employment. It also includes some taxable benefits. Earned income also includes business income if the individual is self-employed. Earned income is used as the basis for calculating jump to RRSP maximum contribution limits.

EFT (electronic funds transfer)

Funds which are electronically jump to credited to your account (e.g. direct deposit), or electronically jump to debited from your account on an ongoing basis (e.g. a pre-authorized monthly bill payment, or a monthly jump to loan or mortgage payment). A jump to wire transfer is a form of EFT.

e-Transfer (formerly Email Money Transfer)

Interac® e-Transfers are a fast, secure way to transfer funds. You provide the recipient's email address and an email is sent to the recipient with instructions on how to complete the transfer.

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G

Growth funds

Growth mutual funds invest primarily in the stocks of different companies with the objective of generating capital growth. The emphasis on growth makes them a higher-risk investment.

Guaranteed investment certificate (GIC)

A GIC is an investment that gives you a guaranteed rate of return over a fixed period of time GICs are available from banks, trust companies and other financial institutions.

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H

Home Equity

The value of a home, minus the amount of any debts registered on the property, such as liens or mortgages. For example, if the value of a property is $250,000 and the mortgages on the property total $200,000, the owner's home equity is $50,000 ($250,000 - $200,000 = $50,000).

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I

Income fund

A type of jump to mutual fund that seek regular income. This type of fund invests primarily in government, corporate and other types of jump to bonds, debt securities, and other income producing securities and in certain circumstances can also hold common and preferred shares.

Index fund

A type of jump to mutual funds that aim to track the performance of a specific stock or jump to bond index. This process is also referred to as indexing and passive management.

Index Portfolios

Index Portfolios include a diversified selection of index funds that are automatically monitored on a regular basis.

Interac® Debit transaction

An Interac® jump to debit transaction is any transaction you make using your debit card, such as a cash withdrawal or a purchase. The amount of the purchase or cash withdrawal is electronically debited from your bank account (see jump to debit card).

Interac® system

Canada's jump to bank machine and electronic jump to debit system. If you use your President's Choice Financial bank card to obtain cash at a bank machine that displays the Interac® symbol, but is not a President's Choice Financial or CIBC bank machine, you will be charged a fee.

Interest (on loans, lines of credit and credit cards)

A charge for money borrowed, generally stated as an annual percentage of the amount borrowed.

Interest (on savings and investments)

The amount of money earned on deposits to a savings account or investment.

Interest-Free Grace Period

This is any period where you do not have to pay interest on a jump to loan or other amount you owe. 

For jump to credit cards, jump to interest is not charged for a minimum of 21 days on new purchases (meaning purchases which have not appeared on any previous statement) if you pay your entire current statement balance in full by the applicable due date. If you do not pay your balance in full by the due date, interest is charged from the transaction date. The interest-free grace period does not apply to cash advances (which include balance transfers and convenience cheques) and interest is charged from the transaction date.

Interest Rate (on loans, lines of credit and credit cards)

The percentage charged for money borrowed.

Interest Rate (on savings and investments)

The percentage earned on deposits to a savings account or investment.

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L

Line of credit

A revolving source of jump to credit with a pre-established limit. You access the funds only as you need them, and any amount that you pay back becomes accessible to you again. Unlike a jump to personal loan, a line of credit permits requires you to pay jump to interest only on the funds that you actually use.

The President’s Choice Financial personal line of credit and go to secured line of credit to are both personal lines of credit. Both of these lines of credit permit you to write cheques and make jump to bank machine withdrawals.

Locked In Retirement Account (LIRA)

Locked In Retirement Accounts (LIRA) are RRSPs, except that the funds are locked in, which means that withdrawals may not be made from a LIRA prior to retirement (generally at age 55 or older) other than in very limited circumstances. They originate from Registered Pension Plans where funds are set aside by an employer, an employee, or both to provide a pension when the employee retires.
When an employee has terminated employment and was a member of a registered pension plan, any funds due to the employee under that plan may be transferred to a LIRA. By the end of the year in which the taxpayer turns 71, a LIRA must be transferred into a Registered Retirement Income Fund (RRIF) or withdrawn.

Loan

A loan is a lump sum that you borrow from a financial institution. To repay the loan, you make fixed payments over a predetermined period of time.

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M

Management expense ratio (MER)

Most jump to mutual fund companies charge certain expenses to the fund, such as costs associated with operating the fund, legal costs, etc. The total jump to management fee is called the management expense ratio or MER.

Management fee

A fee that covers the basic management and operating costs of a mutual fund. A portion of the management fee is paid to the fund’s investment manager(s) for managing the fund. The management fee is calculated as a fixed percentage and is detailed in the mutual fund's jump to mutual fund prospectus.

Money market fund

A type of jump to mutual fund that invests primarily in short-term debt securities maturing in one year or less. These include treasury bills, commercial paper and guaranteed investment certificates.

Money order

A guaranteed form of payment. President's Choice Financial services offers money orders instead of certified cheques.

Mutual fund

When you buy a mutual fund, you are pooling your money with that of other investors. An investment professional called a portfolio advisor takes that money and invests it for all the investors in a variety of different securities as determined by the investment objectives of the mutual fund. This gives you the benefit of jump to diversification that is, being invested in many different investments at once.

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N

Nonsufficient funds (NSF)

This appears on your statement if there are insufficient funds in your account to cover a cheque that you have written or a pre-authorized payment that you have already arranged. You will be charged a service fee for non-sufficient funds.

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O

Online bill payment

The electronic payment of a bill through online banking. The specified amount of the bill is electronically jump to debited (or withdrawn) from your bank account.

Overdraft protection

A short-term source of jump to credit which allows you to overdraw on your chequing account up to a pre-established limit. Having overdraft protection on your account can spare you both the cost and the personal embarrassment of an jump to NSF cheque.

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P

Personal loan

A lump sum that you borrow from a financial institution for a specified period of time. To repay the loan, you pay jump to interest on the entire lump sum, and make payments on a scheduled basis.

PIN (personal identification number)

A secret code that you use to access your jump to bank machine or jump to credit card at a bank machine or at a jump to point of sale (POS) terminal. You may also have a PIN for banking by telephone.

PLUS system

A bank machine network outside Canada, across the U.S. and internationally. Customers who use a bank machine with a 'PLUS' symbol may be charged a fee.

Point of sale (POS)

The terminal at which a customer uses his/her jump to debit card or jump to credit card to make a payment to a merchant. See also jump to Interac® Debit Transaction.

Pre-authorized direct deposit

Direct deposit is a convenient system to automatically deposit funds into a bank account. If you instruct your employer, a government agency or other bank(s) to deposit funds directly into a President's Choice Financial account, you will eliminate the hassle of making your deposits directly. Plus, you get the convenience of immediate access to your money.

Pre-authorized debit

An amount that is electronically jump to debited from your bank account on a specified date by a financial institution (e.g., bill, mortgage or jump to personal loan payments) or perhaps an insurance provider, credit card or utility company.

Prime rate

The base interest rate set by a financial institution. This rate directly affects the jump to interest rates for jump to loans to personal banking customers. It is based on the rate established by the Bank of Canada. Typically, all financial institutions have the same prime rate, which directly affects lending rates for personal banking customers.

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R

RESP (Registered Education Savings Plan)

An RESP is a registered education savings plan that lets you contribute a lifetime maximum of up to $50,000 per child. Unlike an RRSP, your contributions to an RESP are not tax-deductible, but the investment income earned is tax-deferred until withdrawn. When income and any Government Assistance paid into the plan is withdrawn to pay for the child's education, they are taxed at the student's tax rate, which may be lower than that of the contributor.

Registered Retirement Income Fund (RIF)

An RRIF is a tax-deferred account designed to provide owners (annuitants) with a source of income after they have retired. It is designed to generate income from the savings accumulated under an RRSP or a registered pension plan. You can only transfer property to an RRIF from an RRSP, a registered pension plan, or from another RRIF. An RRIF is one option available when you are required to choose a retirement income option for your RRSP when it “matures”, by December 31st of the year in which you turn 71. When your RRSP matures, you can choose from a number of options, including a taxable cash withdrawal, a registered annuity, an RRIF or any combination of these.

One of the most common options is to transfer your RRSP to an RRIF. With this approach, you can benefit from continuing tax deferral on the growth of the assets that were in your RRSP. You can establish an RRIF anytime, but it must be done no later than the year in which you turn 71. Once you establish an RRIF, minimum annual payments must start coming out after the year it was set up.

RRSP (Registered Retirement Savings Plan)

A savings plan registered with Revenue Canada, which allows you to set aside a portion of your jump to earned income now for use in the future. When you contribute to your RRSP, you are eligible to claim a tax deduction. However, cashing RRSPs at a later date will result in the payment of tax.

Risk

The future chance or probability of loss.

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S

Secured line of credit

A revolving source of jump to credit with a pre-established limit (jump to line of credit), for which the customer must provide jump to collateral.

Stop payment

A service which enables you to request a 'stop' on any cheque or other jump to pre-authorized payment from your chequing account, as long as the funds have not yet been sent.

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T

Tax-Deferred

This is the status of an investment account in which investment earnings accumulate tax free until the investor withdraws them. Tax-deferred investments include those in an RRSP, for example.

Tax-Free Savings Account (TFSA)

A TFSA is a registered savings plan that allows you to earn investment income tax-free inside the plan. Contributions to the plan are not tax-deductible and withdrawals of contributions you made, and earnings on the plan, assuming you follow the rules, are not taxable.

Term

The period of time during which a financial contract − such as a jump to GIC or a jump to loan − is in effect . When the term of a loan expires, any outstanding amount must be repaid or the loan can be re-negotiated at then-current market rates and conditions.

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W

Wire transfer

An electronic transmission of money from one place to another, either within Canada or internationally.

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