Interest and yield
These terms come from Regulation DD, the Truth in Savings rule, and the deposit agreements that follow it. The examples are synthetic.
| Term | Plain definition | Example |
|---|---|---|
| Annual percentage yield (APY) | Total interest paid on an account as a percentage, reflecting the rate and compounding over 365 days [1][11] | Use APY, not the rate, to compare two savings accounts |
| Interest rate | The annual rate paid on an account, not counting compounding [1] | A rate slightly below the APY on a daily-compounding account |
| Interest | Payment for the use of your funds, calculated by applying a periodic rate to the balance; a bonus or other consideration worth $10 or less in a year is not interest [1] | The monthly credit labelled interest paid on a statement |
| Average daily balance method | A periodic rate applied to the average of each day's balance in the period [1] | $1,000 for 15 days and $2,000 for 15 days averages $1,500 |
| Tiered-rate account | An account with two or more rates for specified balance levels [1] | One rate under $5,000 and another above |
| Variable-rate account | An account whose rate may change after opening [1] | A high-yield savings rate that moves with the market |
| Bonus | A premium, gift or award worth more than $10 for opening, keeping or growing an account [1] | A cash reward for setting up direct deposit |
| Time account (CD) | An account with a maturity of at least seven days; withdrawals in the first six days after opening generally are not allowed unless a penalty of at least seven days interest applies [1] | A 12-month certificate of deposit |
| Grace period | After an automatically renewing time account matures, the window to withdraw without penalty [1] | Days after a CD matures to move the money |
Moving money
Regulation E, the electronic fund transfer rule, supplies most of the formal definitions; Nacha explains how the ACH network works.
| Term | Plain definition | Example |
|---|---|---|
| ACH (Automated Clearing House) | The U.S. electronic network for bank-to-bank deposits and withdrawals, run through the Federal Reserve and The Clearing House under Nacha rules [10][11] | A transfer from your checking account to savings at another bank |
| ACH credit | A push payment; Nacha says credits settle the same day, the next banking day or in two banking days [10] | Payroll direct deposit |
| ACH debit | A pull payment the account holder authorized; settles the same or next banking day [10] | A utility autopay |
| Electronic fund transfer (EFT) | A transfer that adds or removes money through a computer, phone, ATM or debit card; ACH transfers are one type, and a wire is not [11]. ATM transactions, debit card purchases, some online bill payments and automatic deductions get federal error and liability protections [5] | A debit card purchase or ATM withdrawal |
| Preauthorized transfer | A transfer you approve in advance to recur at roughly regular intervals [2] | A monthly gym membership debit |
| Access device | A card, code or other means you can use to start electronic transfers [2] | Your debit card and PIN |
| Direct deposit | Pay or other money sent electronically straight into your account; the FDIC lists direct deposit from your job as one way to add money [8], and Nacha describes payroll direct deposit as an ACH credit [10] | A paycheck that never arrives as paper |
| Routing number | The bank identifier used with your account number for direct deposit and transfers [12][13] | Capital One 360 Checking uses 031176110; Ally uses 124003116 |
| Wire transfer | A direct bank-to-bank transfer; federal rules treat wired funds as next-day items, and Ally makes domestic wires received by 5 pm ET available the same day [4][11] | Sending a home down payment to a title company |
| Business day | A day the bank's offices are open for substantially all business functions [2]; Ally uses Monday to Friday except federal holidays [11] | A Friday-night transfer starts on Monday |
Balances, pending items and holds
This is where most confusion starts: the money in an account and the money you can spend today are often different numbers.
| Term | Plain definition | Example |
|---|---|---|
| Available balance | What you can spend now, after holds; Ally notes its CoverDraft limit is not included in it [11] | Balance minus a check still on hold |
| Authorization hold | A hold on funds when a debit card purchase is approved, before it posts; Ally's agreement counts debit card authorization holds among the items its Overdraft Transfer Service can cover [11] | A gas station pre-authorization |
| Deposit hold | A delay before deposited funds can be withdrawn [4] | A check deposited Tuesday, available Thursday |
| Next-day availability | Deposits that generally must be available the business day after deposit, such as cash in person, wires and certain government and cashier's checks [4][9] | A Treasury check deposited in person |
| Exception hold | A longer hold allowed for new accounts, large deposits, repeated overdrafts, doubtful checks or emergencies; the bank generally must notify you [4][9] | A large check on a two-week-old account |
| Cutoff time | The time after which a deposit counts as made the next business day; no earlier than 2:00 p.m. at physical locations under federal rules [4] | A deposit after the cutoff on Friday counts as Monday's |
| Periodic statement | A regular account statement, four or more times a year [1] | Your monthly checking statement |
Fees and overdrafts
The CFPB's overdraft explainer is the basis for most of these; the opt-in rule only covers ATM and one-time debit card transactions.
| Term | Plain definition | Example |
|---|---|---|
| Overdraft | A transaction your account lacks the money to cover [3] | A $60 purchase with $40 available |
| Overdraft coverage opt-in | Banks generally cannot charge an overdraft fee on ATM and one-time debit card transactions unless you opt in [3] | Declining opt-in means those transactions are declined instead |
| NSF fee | A fee a bank may charge when it declines a check or recurring payment for non-sufficient funds; often the same as an overdraft fee [3] | A rent check returned unpaid |
| Returned item fee | A fee a merchant may charge when your payment is declined [3] | A landlord's charge for a bounced payment |
| Monthly maintenance fee | A recurring account charge the bank must show you when you open the account; many banks waive it for a minimum balance or direct deposit [6] | A fee waived with direct deposit or a minimum balance |
Protection and disputes
Two different protections are easy to mix up: FDIC insurance protects deposits if an insured bank fails, while Regulation E limits your losses from unauthorized electronic transfers.
| Term | Plain definition | Example |
|---|---|---|
| FDIC insurance | Coverage of $250,000 per depositor, per ownership category, at each FDIC-insured bank [7] | Checking, savings, money market deposit accounts and CDs are covered; stocks and crypto are not [7] |
| Ownership category | The legal way an account is held, such as single, joint, certain retirement or trust; deposits in the same category at one bank are added together [7] | A joint account is a separate category from your single account |
| Unauthorized electronic fund transfer | A transfer started by someone else without actual authority that gives you no benefit [2] | A stolen card number used online |
| Liability cap | Report a lost or stolen debit card within 2 business days and liability is capped at the lesser of $50 or the unauthorized amount; later, up to $500 [5] | Report the lost card the same day |
| Error resolution | Banks generally have 10 business days to investigate; if they need longer they generally must credit the disputed amount, minus up to $50, and usually have up to 45 days to resolve it [5] | A disputed ATM withdrawal |
How to use this glossary
When a fee schedule or agreement uses a term differently from the definitions here, the agreement governs your account, but the federal definitions set the floor. Check three numbers on any new account: the APY and whether it is variable, the funds availability schedule for checks, and the overdraft setting. Our mobile deposit guide shows how the hold terms above play out with a real check amount.
Questions before you decide
What is the difference between APY and interest rate?
Regulation DD defines the interest rate as the annual rate paid without compounding, and APY as the total interest paid expressed as a percentage, reflecting the rate and compounding frequency over a 365-day period. Compare savings accounts by APY.
What is a deposit hold?
A delay before deposited money can be withdrawn. The CFPB explains that longer holds are allowed for new accounts under 30 days old, large checks, repeatedly overdrawn accounts, suspected fraud or uncollectible checks, and emergencies.
What counts as a business day?
Regulation E defines it as any day the bank's offices are open to the public for substantially all business functions. Ally's agreement uses Monday through Friday, excluding federal holidays.
Is an overdraft fee the same as an NSF fee?
No. The CFPB says an overdraft fee is charged when the bank pays a transaction you lack funds for; an NSF fee may be charged when it declines a check or recurring payment instead, and is often the same amount.
Follow the sources
- CFPB Regulation DD, 12 CFR 1030.2 definitions Checked Oct 30, 2026
- CFPB Regulation E, 12 CFR 1005.2 definitions Checked Oct 30, 2026
- CFPB: what is overdraft protection Checked Oct 30, 2026
- CFPB: how quickly can I get money after I deposit a check (deposit holds) Checked Oct 30, 2026
- CFPB: getting money back after an unauthorized transaction Checked Oct 30, 2026
- CFPB: monthly maintenance fees Checked Oct 30, 2026
- FDIC: Understanding deposit insurance Checked Oct 30, 2026
- FDIC: Get Banked Checked Oct 30, 2026
- Federal Reserve: Regulation CC compliance guide Checked Oct 30, 2026
- Nacha: How ACH payments work Checked Oct 30, 2026
- Ally Bank Deposit Agreement (definitions and overdraft services) Checked Oct 30, 2026
- Capital One: switch to 360 Checking (routing number) Checked Oct 30, 2026
- Ally Bank deposits help (routing number) Checked Oct 30, 2026
Provider terms can change. Recheck the linked source before applying or subscribing.