7 banking terms you have to know
Whether you’re a fresh graduate or a seasoned professional, having a bank account is necessary if you’re looking to manage your finances efficiently. If you already have a Bank al Etihad account, good move! And if you don’t, you can easily open a digital account from your smartphone in minutes without the need to visit a physical branch.
In either case, you’ve probably heard some banking terms you didn’t understand or may hear ones that confuse you in the future. We’re here to stop that from happening!
In this article, we will help you understand each term clearly, starting with the concept of minimum balance.
Minimum balance
You’ve probably heard of this before. It refers to the minimum amount you must deposit to open a bank account. This applies to current accounts (with a 200 JOD minimum balance) and savings accounts (with a 100 JOD minimum balance). As for salary and digital accounts, these don’t require a minimum balance to open or keep active.
Standing order
This feature allows you to schedule regular automatic money transfers through our mobile banking app. Once you set up a standing order, the specified amount is automatically transferred from one account to another based on your preferred schedule. Whether you want the transfer to happen daily, weekly, or on a specific date, like the 7th of every month, the choice is yours!
You can use this feature to schedule various payments so you don’t forget them. Whether it’s your monthly rent, children’s allowances, or other recurring expenses. You can also use this feature to automatically transfer funds from your current account to your savings account to boost your savings.
IBAN
IBAN stands for International Bank Account Number. Every bank account has a unique IBAN and account number that helps identify you. Banks use this international system to help them process, transfer, and make payments correctly. Jordanian IBANs begin with a two-letter country code, followed by a combination of 28 letters and numbers. For example, JO and the remaining digits are your account number.
Don’t know how to find your IBAN? You can get it through our app by following the steps here.
Dormant account
When you haven’t used or conducted any transactions on your account for at least one year, your account becomes dormant. In simpler terms, it’s frozen. Unfortunately, this means you won’t be able to transfer or withdraw any funds unless you reactivate the account by visiting your branch.
Term deposit
You’ve probably heard this term from friends or family, but maybe you’re not sure what it means. A term deposit is an easy and low-risk way to invest your money. Simply head to our app and create a term deposit. Then, add the amount of money you want to it. You’ll start earning returns on a monthly, quarterly, or yearly basis. To get started, you’ll need a minimum of 5,000 JOD. The longer you decide to keep your funds in a term deposit, the higher the interest rate you’ll get.
You can think of term deposits as a way to invest your savings and protect them from being spent little by little. When you create a term deposit using your savings, you will avoid the temptation to spend them impulsively, especially since term deposits are locked in for a specific period. If you decide to break one before its maturity date, you’ll need to pay a fine.
You can also increase the deposit amount. Instead of transferring a portion of your salary to a regular savings account, you can add it to your term deposit. Then, when the due date finally arrives, you’ll thank yourself for not spending your savings. You’ll also receive an extra reward — the financial returns you earned!
Find out how to create a term deposit here.
Grace period
You’ll hear this term a lot if you decide to take out a loan or apply for a credit card. It refers to a specific period where a bank allows you to postpone making a payment on your loan or credit card without incurring any fines. But you will still be required to pay the interest rate as part of your loan instalment during this period.
Loan payment postponement
Suppose you found yourself in a tough financial situation, struggling to make your loan payment for the month. Don’t worry! You have the option to postpone your payment. In fact, you have this option twice a year, with a minimum of 6 months between each postponement.
When your payment is postponed, the interest portion of your monthly instalment accumulates. Instead of paying it immediately, it’s added as a balloon payment at the end of your loan term. On the other hand, the principal portion is spread out across your upcoming instalments.
Now that we’ve explained the meanings of some banking terms that can be tricky to understand, you can put your new knowledge to use. With this understanding, you can confidently carry out your banking transactions without feeling like your bank is speaking another language.
Don’t have a Bank al Etihad account? Open a digital one today.
