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Do you ever leave the bank baffled by the terminology you have just come across? Or perhaps get puzzled by discussions about investment? Questions about what exactly you have just heard can start to make you uneasy. Here are a few fashionable buzzwords that will give you a boost the next time you talk finance:
Biometrics is the process of using unique physical characteristics to identify individuals, with specific reference to bank accounts or private information using unique criteria. Financial institutions use this method to make positive identifications based on facial, voice and fingerprint information.
A chip card is a debit or credit card embedded with a microchip that contains your personal and account information. The chip card requires a pin to access account information which has significantly reduced the instances of card fraud around the world.
Compound interest is the process of accumulating interest on interest that has already been earned. For instance, for each month money is kept in, for example, a tax free investment account, interest accrues on the existing capital balance. This can be likened to a snowball effect, as the interest paid out grows so too does the rate at which you earn interest.
Contactless payment is a technological trend that allows you to pay at a till by hovering your debit or credit card over the register as opposed to swiping. This allows for a quicker transaction and is often capped at a certain value.
Diversification is the process of making sure that you spread your financial stake across multiple areas to reduce risk. For example, investing your money in a money-market linked access accumulator account with African Bank while also investing in the government bonds could be how you choose to diversify your savings.
A fixed interest loan is a loan given at a non-variable interest rate that is determined by the lender at the point the loan is issued. This type of interest rate does not fluctuate with external variables. This is not to be confused with prime rate which is the interest rate that commercial banks charge their most ‘creditworthy’ customers, which is generally determined by factors such as credit score and debt risk.
Tokenization in the realm of data security is when elements of sensitive information, such as account numbers, are replaced by a random sequence of non-sensitive numbers. Essentially a token becomes an encoded representation of your data without leaking your private information. This token with no monetary information adds an additional layer of security to online payments made by credit card.
Don’t get overwhelmed by sometimes temporary financial jargon or terminology. Thanks to these buzzwords you can keep up-to-date and make sure you are not left behind.