These common terms may be helpful as you bank with NSB. Questions? Contact a Business Banker.

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Accrued Interest

Interest earned on your deposit or loan account that has not yet been paid. 2

ACH (Automated Clearing House)

The online capability to electronically collect funds or make payments from or to business or personal accounts at a U.S. financial institution, usually with next day settlement.1

Adjustable Rate

The process of reducing debt through regular installment payments of principal and interest that will result in the payoff of a loan at its maturity. 2

Annual Percentage Rate (APR)

The cost of credit on a yearly basis, expressed as a percentage. 2

Annual Percentage Yield (APY)

A percentage rate reflecting the total amount of interest paid on a deposit account based on the interest rate and the frequency of compounding for a 365-day year. 2

Availability Policy

A bank’s policy as to when deposited funds will be available for you to withdraw. 2

Available Balance

The balance of an account, less any hold, uncollected funds and restrictions. 2

Available Credit

The difference between the present balance of the account and credit limit assigned to your account. 2

Balloon Payment

A larger, one-time payment at the end of the loan term. 3


Under bankruptcy law, the legal proceedings by which a bankrupt person’s affairs are turned over to a trustee for administration. 2

Bill Pay

Payments sent through Business Online Banking, including wire transfers, ACH transfers and single payments.

Billing Cycle

The time interval between the dates on which regular period statements are issued. 2

Business Day

Any day when banks are open to the public for business. 2

Cash Management

Secure online banking tools to help simplify business processes, such as transmitting payroll and conducting wire transfers.

Closed-End Loan

Any loan amount plus finance charges to be repaid in full by a specified date. 2


Assets offered to secure a loan or other credit. 2

Collected Funds

Cash deposits or checks that have been presented for payment and for which payment has been received. 2


A service that transports commercial and documents packages from one location to another.


An unpaid debt that was not paid within 30 days of the due date. 2

Direct Deposit

A payment that is electronically deposited into an individual's account at a depository institution. 2


The ability to sign legally binding contracts or other documents online.

Electronic Banking
Electronic Federal Tax Payment System (EFTPS)

A system to pay local, state or federal taxes without leaving your home or office.

Electronic Funds Transfer (EFT)

The transfer of money between accounts by consumer electronic systems-such as automated teller machines (ATMs) and electronic payment of bills-rather than by check or cash. (Wire transfers, checks, drafts, and paper instruments do not fall into this category.) 2

Escrow (account)

An account established to pay bills during a loan period such as taxes, insurance premiums, and other charges upon their due date.

Escrow (third party)

Funds held by a third party on behalf of two other parties in a transaction until it receives written or oral instructions or obligations have been fulfilled. 2


An executor, administrator, guardian, conservator, or trustee for a family trust, authorized trust, or testamentary trust, or receiver or trustee in a bankruptcy. 2

Fixed Rate Loan

A payment and interest rate that is the same over the life of the loan. 2

Fraud Alert

A consumer’s ability to place a fraud alert on their credit record if they believe they are a victim of identity theft. The alert requires any creditor to contact the consumer by phone and verify that the credit application was not made by an identity thief. 2


A legal process that allows a creditor to remove funds from your bank account to satisfy a debt that has been unpaid. 2


A party who agrees to be responsible for the payment of debt of another party if they default. 2


An amount of a customer’s balance may not be withdrawn until an item has been collected, or until a specific check or debit is posted. 2


A Remote Deposit Capture (RDC) solution for the fastest, greenest, easiest way to deposit checks: no deposit slips, no photocopying checks, and no need to visit the bank. All you need is a desktop scanner and secure internet connection.

Insufficient Funds

An inadequate checking balance in a depositor’s account to pay a check presented for payment. 2

Interest Rate (Deposit Accounts)

The amount paid by the bank to the depositor based on a percentage of your account balance.

Interest Rate (Loan Accounts)

The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. 2

Letter of Credit

Letters of Credit are a loan product that guarantees performance, either financial or operational. The financial institution ensures a payment will be made to the beneficiary for a specific transaction, provided the conditions of the letter of credit are met.


A legal claim against personal or real property. The lien holder is paid the amount that is owed once the property has been sold. 2

Line of Credit

Use a line of credit to borrow cash up to the borrowing limit established by the bank, and pay interest on the outstanding monthly balance only. Each time you pay back principal, money is freed up again for future loans. Typically, the financial institution will ask for a personal guarantee and secure the loan with business assets. 1

Loan Modification

A contractual agreement that allows the borrower or lender to permanently change one or more of the terms of the original loan contract. 2

Loan-to-Value Ratio (LTV)

A ratio of the amount borrowed on a loan (principal) to the value of an asset. 2

Lock Box

Directs payments to a financial institution, rather than directly to a company, to process and deposit funds into the company’s account.

Non-sufficient funds (NSF)

A checking account that does not have enough money in it to cover pending or presented transactions. 4

Online Banking

This service allows an account holder to obtain account information and manage banking transactions through financial institution websites, via computer, tablet, or phone. 2

PITI (Principal, Interest, Taxes and Insurance)

Common acronym for principal, interest, taxes, and insurance—used when describing the monthly charges on a mortgage. 2

Positive Pay

Helps reduce losses due to fraud and forgery by giving an account holder the opportunity to review all checks online that do not match their check issue data, providing proactive versus reactive fraud prevention. The account holder provides the bank with an electronic file of checks issued each time their company issues checks. Each business day, the financial institution reports any checks that do not match the check number and amount in the check issue file. The account holder then notifies the financial institution online whether to pay or return each reported exception. The financial institution provides an online audit trail showing all items posted to the account and those returned. 1

Principal Balance

The outstanding balance on a loan, excluding interest and fees. 2

Promissory Note

A debt instrument that contains a written promise by one party to pay another party a definite sum of money. 5


A second loan is taken out to pay off the first, higher-rate loan to obtain a better interest rate, lower payments or to borrow cash on the equity that has built up on a loan. 2

Remote Deposit Capture (RDC)

Account holders deposit and scan checks using a supported desktop scanner and secure Internet connection to submit deposits electronically. RDC systems verify image quality before checks are released to the bank. Complete deposit information and images are available through online reporting. 1

Residual Interest

Interest that continues to accrue on your credit card balance from the statement cycle date until the bank receives your payment. 2

Revolving Credit

A credit agreement that allows you to borrow against a preapproved credit line when purchasing goods and services. 2

Secretary of State

Licensing agency for the state of Vermont to register a business.

Secure File Transfer

A method of sharing information that safeguards data in transit using layers of digital protection.

Uniform Commercial Code (UCC)

A set of statutes to provide consistency among commercial laws in various states. 2

User Management

Depending on your number of employees, owners and company policies, Business Online Banking lets you set up multiple users with different responsibilities.

Variable Rate

An interest rate or dividend that changes on a periodic basis. 2

Wire Transfer

Enables parties to send funds or receive funds securely from one bank to another with specific instructions for payment and settlement. Wires are direct, immediate, bank-to-bank transfers through the Federal Reserve System. 1