ABC of banking terms

 Letter of credit

 

An extremely secure payment method that is often used especially in international trade. The word letter of credit in banking language means a letter by which the bank orders another institution or person to pay a certain sum to the benefit of a certain third party upon fulfillment of certain conditions. With a letter of credit, the principal, through the bank, makes available to the beneficiary a certain amount of money, which the beneficiary can use when he fulfills certain obligations to the principal.

 

 

 

Acceptance order

 

A form that can serve as an instrument to secure payments or as an order with a predetermined due date. It is used especially in payment transactions between legal entities. It is an order to the organization that carries out payment transactions (bank) to transfer the amount indicated on the order to the credit of the account of another legal entity from the account of the issuer of the acceptance order on a predetermined date.

 

 

 

Active

 

All property owned by an individual, organization or association, e.g. cash, tangible and intangible assets.

 

 

 

Active interest

 

The interest that the creditor (bank) receives for the loaned money.

 

 

 

Actuary

 

A person who specializes in assessing risk and the probability of occurrence of positive or negative events that may affect future business. Today, this is the title for an insurance expert for recalculating the profitability of insurance and premiums. This requires the actuary to have a good knowledge of mathematical, statistical and information tools. That is why the title insurance mathematician is often used for an actuary.

 

 

 

Loan amortization

 

Credit repayment.

 

 

 

Amortization of the security

 

A procedure that is performed when a security is lost or destroyed. Such paper is declared invalid and must be written off. The issuer of the security must hand over all the documents to its previous holder at his request and give him access to all the information he needs in the depreciation procedure. The owner pays all costs incurred in providing access to the mentioned information.

 

 

 

Amortization plan

 

Loan repayment plan. It is usually prepared in the form of a spreadsheet showing the repayment of the loan through the repayment period by capitalization periods. For each capitalization period, interest, amortization and the balance of the loan principal are calculated. The dynamics of loan repayment depends on the capitalization period. frequency of repayments, e.g. monthly, quarterly, semi-annually, annually.

 

 

 

Anatomist

 

Charging interest on interest. According to the Code of Obligations of the Republic of Slovenia, antagonism is prohibited.

 

 

 

Annex

 

Attachment, addition to a file or contract.

 

 

 

Anticipatory interest ‒ interest

 

Interest that is calculated at the beginning of the accounting period. The starting point for calculating interest using this method is the final value of the principal, i.e. the value at the end of the accounting period. In all anticipatory transactions, it must be explicitly stated what kind of interest calculation is involved. If there is no such statement, the client has the right to request the calculation of interest by taking into account the legality of the discursive calculation or calculation of interest at the end of the accounting period.

 

 

 

Annuity

 

A predetermined amount to repay a loan or credit over a specified period. It consists of interest and amortization (the part of the principal that is repaid with an annuity), its amount depends on the amount of the principal, the interest rate and the repayment period of the loan. A monthly annuity is a monthly loan repayment installment. With a variable interest rate, the part of the annuity that is intended for repayment of the principal also changes.

 

 

 

Annuity method of loan repayment

 

Repayment, in which the borrower repays the debt in a single amount, from which the interest for the period between two payments is first paid, and the remainder of the amount represents the repayment, by which his debt is actually reduced.

 

 

 

AOS – Additional Optional Services

 

Abbreviation for "additional optional services" or additional services offered by the bank outside the scope of SEPA requirements (Single Euro Payments Area; see more on this on the SEPA website ).

 

 

 

Denomination

 

With the amount, the nominal, nominal value defined in advance, to which the banknote or security is read.

 

 

 

Appreciation

 

Capital appreciation is an increase in the value of capital over a certain period.

 

 

 

Ara

 

An amount of money or other compensation that one party hands over to the other as a sign of confirmation of the contract upon conclusion of the contract. The purpose of the are is to strengthen the commitment of both contracting parties, therefore the contract (unless otherwise agreed) is concluded only when the buyer hands over the agreed are to the seller. From this moment on, the contract is considered concluded, even if it is not signed. When the contract is fulfilled, the ara is returned or included in the purchase price.

 

 

 

Arbitration

 

Arbitration in non-judicial disputes. The parties involved, who cannot agree on a certain issue, choose one or more persons (arbiters) who, on the basis of the obtained data, independently adjudicate the dispute.

 

 

 

ATM - Automated Teller Machine

 

Abbreviation for "automated teller machine" or, in our opinion, bank machine .

 

 

 

Avalanche

 

Guarantee given by signature on a bill of exchange, promissory note guarantee.

 

 

 

Advance payment

 

An amount that is paid in advance.

 

 

 

Auto credit

 

Dedicated consumer credit, intended exclusively for the purchase of a new or used car on the basis of a pre-invoice. As a rule, the interest rate for car loans is slightly lower than the interest rates of other consumer loans.