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It's no secret that personal finance and all the related jargon that comes with the different products banks offer can get confusing.
But knowing banking lingo — words like APY, ATM networks, maturity date — can translate to actual monetary savings for your wallet.
With savings accounts, there are a few different kinds. Brick-and-mortar savings accounts come from banks that have physical branch locations where you can do your banking in person. Then there are high-yield savings accounts, certificates of deposits (CDs) and money market accounts, which can be found at these same physical banks or through online-only banks.
Online-only bank accounts typically offer higher interest rates and smaller fees than brick-and-mortar bank accounts because these banks don't have to pay overhead costs to operate branches. (Read more about the difference between brick-and-mortar vs. online savings accounts.)
But no matter what kind of savings account you have, you'll want to know what terminology means what. Some accounts use the same terms while others have jargon that is unique to that type of account.
Below, CNBC Select breaks down the most common savings-related terms, so you can better understand how the various bank accounts work.
An ACH transfer is when you want to make small and frequent payments electronically, i.e. direct deposit, automated bill payments, etc. ACH transfers are typically always free but usually take at least one business day to complete the transfer.
Annual Percentage Yield
Your annual percentage yield, also known as APY, is the amount of interest your account earns in a year. When you sign up for a new savings account, it's important to know the APY offered since it can have a big impact on how much money your savings earn.
ATMs can either be in-service or out-of-network, depending on which bank you have. When you make a transaction at an ATM that is outside your bank's network, then a fee will most likely be applied by both the ATM operator and your bank.
For the best brick-and-mortar savings accounts with expansive fee-free ATM networks, check out CNBC Select's ranking here.
Your balance is the amount of money you have in your savings account. It will change depending on if you withdraw cash, make additional contributions or accrue interest on what's in the account.
CDs often require a minimum opening deposit, which acts as your balance for the length of the CD term with no additional contributions.
Most brick-and-mortar savings accounts require making a minimum deposit to open an account. Some high-yield savings accounts may require that you make a minimum deposit to open, as well as maintain a minimum balance to earn interest.
For the best high-yield savings accounts with low (or no) minimum balance requirements, check out CNBC Select's ranking here.
When you put your money in a CD, you earn a fixed interest rate for a specific amount of time on that initial deposit. You can't withdraw your money or make additional contributions (without penalty) until your that time is up, so your money is essentially locked away. There are different types of CDs that can help you get around this, which you can read about here.
A CD ladder is a savings strategy people use to maximize their earning potential. It involves buying different CDs with different term lengths. With the shorter-term CD matures, that money gets reinvested in the next CD term and you continue the process as each term is up. By combining short-term and long-term CDs, you "ladder" them, giving yourself regular access to your funds while taking advantage of the CD rates currently offered.
CD term length
The amount of time your money sits in a CD account before you can touch it. CD term lengths range between three months and five years, and usually the longer the term, the higher the APY you earn.
For the best CDs with 3-month, 6-month, 1-, 3- and 5-year terms, check out CNBC Select's ranking here.
Early withdrawal penalty
Typically, you can't access your money before your CD term ends, or you'll get hit with an early withdrawal penalty. The penalty fees can vary depending on your bank and your CD's term length, but it's usually the interest earned, or the interest that you would have earned, over a certain number of days or months.
A fixed APY does not change. Whereas brick-and-mortar and high-yield savings offer variable APYs, CDs offer account holders a fixed APY that they are locked into for the duration of their CD term.
A grace period is the amount of days after a CD term ends where users can either withdraw their funds or deposit more money into their account penalty-free.
For example, account holders of the BrioDirect High-Rate CD have a 7-day grace period after the maturity date to withdraw funds or deposit more without penalty.
The maturity date is the date that your CD term ends. At this point when the term length is over, savers can withdraw their funds penalty-free. The money they get back includes their initial deposit, plus the interest earned over time. If you don't need the money, you can also renew the CD term for the same amount of time or transfer it to a new CD.
Instead of going to the bank to deposit a check, you can use your mobile banking app to scan a photo of the check and have the funds immediately deposited into your account. It can sometimes take a day or two for the funds to be accessible.
A wire transfer is when you want to move funds from one bank account to another and have the money be available for use in the same business day. Banks usually charge a fee for wire transfers.
Having a savings is important no matter what type of account you choose to open. Take time to understand the key terms before signing up so you know how to properly use your account and save spending money on unnecessary fees.
Once you master your savings, there's always more to learn. Start by learning about the 25 key terms everyone with a credit card should know.
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