7 banking terms you need to know before opening an account
No matter if you’re a fresh graduate or if you’re mid-career, a bank account has become a right of passage for everyone to manage their money! You’re probably wondering how to get started, or what kind of account is the best for you. Whether you’re planning to visit a branch or open a digital account through your phone, there are a few basic terms you should know.
Minimum balance: You will probably hear this a few times, but this basically means that you have to deposit a certain amount to open the account. This applies to current accounts with a 200 JOD minimum balance and saving accounts with a minimum of 100 JOD. Others like salary or digital accounts don’t require you to have a minimum balance to open or keep the account active.
Available vs current balance: This can be a bit confusing, but we’ll break it down for you. The current balance on your bank account is the total amount of money in the account while the available balance is the amount in your account minus your last purchase. For example, if you have 100 JOD in your account and you pay for something worth 20 JOD, your current balance will show 100 JOD but your available balance will be 80 JOD.
IBAN: It stands for International Bank Account Number. Every bank account comes with its own unique IBAN and account number that helps identify you. This is an international system used by banks to help them ensure that they are processing, transferring, and making payments correctly. Your Jordanian IBAN begins with a two letter country code, followed by a mix of 28 letters and digits. For example, your Jordanian bank account/IBAN would start with Jordan’s country code, JO and the remaining digits are your account number.
Find out how to get your IBAN number through the app here.
Dormant account: This means that you haven’t used or performed any transactions on your account for at least one year, this causes your account to go dormant or in simpler terms it’s frozen. Unfortunately you won’t be able to transfer or withdraw any money without reactivating it by visiting your branch.
Term deposit: You’ve probably been hearing about this but you can’t really figure out what it really means, it’s a way to invest your money with very little risk. Basically you create a term deposit through the app and tie up an amount of money and you get interest paid monthly, quarterly or annually. The starting amount to create a term deposit is 5,000 JOD and the longer you keep your money tied up, the higher the interest rate you receive.
You can think of a term deposit as a way to save and help you budget. For example, you can create a term deposit with the money in your savings, this way you won’t have that urge to spend it because it’s tied up and you can’t break it before its maturity date.
You can also top-up your deposit, so instead of transferring to your savings account the day you get your paycheck, you can take that amount and top-up your deposit. When it reaches its maturity date you’ll feel so proud of yourself for not indulging and you’ll get that extra bonus of extra cash from the interest you earned.
Learn more about how to create a term deposit here.
Grace period: This term you’ll hear more often if you ever decide to take out a loan or issue a credit card. It’s basically a certain amount of time when a bank allows you to delay making a payment on a loan or credit card without paying a penalty or incurring interest charges.
Deferred payment: Also known as a loan postponement, which basically means that if you’re in a tight spot for that specific month you can postpone your payment. You can do this twice a year only and depending on your loan, interest may accumulate during the deferment period. Which means the interest is then actually added to the amount due at the END of the deferment period, when it’s time to pay back your loan again.
Now that we’ve broken down recurrent words and covered the basics They say knowledge is power, and we’ve powered you with the basics. Use your newfound knowledge and actually open your account! Just follow this link and you’re good to go.
