The digital age is advancing at a blistering pace. You need to stay on your toes to keep up, as technologies, devices, and entire operating systems are constantly replaced by the latest, improved versions.

Language evolves just as fast, especially in the digital world, where developers constantly create new terms and acronyms. For those of us who aren’t digital developers, this can get very confusing – but don’t stress. This blog breaks down banking jargon in the digital age – no tech skills needed.

You’ll find many of these common abbreviations and terms in the bank’s regular communications – often on your monthly statement. These are short-form descriptions of various digital transactions, fees, and codes related to your account. So, rather than writing out ‘automated teller machine’ every time you make a cash withdrawal, it will just show as ‘ATM’, which has now become part of everyday language.

However, not all new banking terms are as simple as ATM.

Banking terms and acronyms you need to know

• AI chatbot
  Chatbots are computer programs that simulate written or spoken human speech. These days, most chatbots use conversational artificial intelligence (AI), which, for example, helps them respond to questions even if they aren’t grammatically correct, based on data they have collected. Chatbots are increasingly replacing human interaction with many large institutions, not only banks, to help customers navigate their way around. Nedbank’s AI chatbot, Enbi, is a reliable digital banking assistant, making Nedbank’s features easy to navigate. It’s designed to be helpful and friendly, and to evolve continuously to keep up with all your banking needs. And if Enbi can’t help, you’ll be transferred to a human colleague to help you further.
  
  
• APR
  APR stands for annual percentage rate, which is the total cost of borrowing money, including interest and fees. It’s relevant to your home loan and other significant bank loans.
  
  
• Basis point
  Basis points are often referred to when talking about interest rate changes. One basis point is equal to one-hundredth of a percent, so 100 basis points equals 1%.
   

• Compound interest
  Compound interest is interest earned on interest already earned. For example, if you put R100 into an account that earns interest at 6% a year, compounded monthly, you’ll earn 50c in interest at the end of the first month. That interest is then added to your balance, so the next month’s interest is calculated on R100.50. Although it seems small, the effect of compounding adds up quickly, so you’ll earn a lot more than R6 on your R100 deposit over the year, even though the interest rate stays at 6%. Non-compounding interest would continue to earn you R6 on R100 every year. Compound interest is an effective way to combat the effects of inflation on your savings.
  
  
• Conditions
  Terms and conditions (T&Cs) are the fine print of a bank account or loan agreement, and it’s to your benefit to know exactly what they mean. It’s your responsibility to read and understand the implications of your financial obligations.
  
  
• Credit, credit history and credit score
  Your credit score generally refers to your ability to borrow money. It measures the willingness of banks and other lenders to offer you a loan. If you have a strong credit history, that means you have a proven track record of paying bills on time and paying your debts. Your credit score is a measure of your creditworthiness based, in part, on your credit history. Having a higher credit score can help you qualify for lower interest on loans, better credit terms, larger loan amounts, and higher credit limits.
  
  
• CVV
  This stands for card verification value, the 3 digits on the back of your credit card that you need to authorise online transactions. It’s a security feature to verify your card and protect you from fraud during online transactions.
  
  
• EFT
  The acronym for electronic funds transfer, like ATM, has passed into natural language use. It’s simply a way of transferring money electronically between banks, businesses or individuals.
  
  
• IBAN
  The international bank account number (IBAN) is a standardised international numbering system for bank accounts. If you need to do international transactions through your account, the IBAN provides a unique account identifier, which improves efficiency and security.  
  
  
• Online bank
  These banks, also called digital or internet banks, operate primarily via the internet. They’re becoming popular because you can manage your accounts from a computer or mobile device anywhere, anytime.
  
  
• Overdraft
  An overdraft facility allows you to spend more than the amount available in your account. The amount you use must be repaid with your next salary deposit. If you have an overdraft facility for your account, you will usually be charged an overdraft fee, but you will be charged interest only when you use your overdraft facility.
  
  
• PIN
  ‘Personal identification number’ is another banking acronym that has become part of everyday language. A PIN is a numeric password used to authenticate your use of a banking system, card or account. It is commonly used with credit and debit cards for secure transactions.
  
  
• POS
  POS is short for point of sale, in other words, the place where you pay for goods, like a till point or sales counter. POS systems enable sales, process payments, and manage stock at stores. They are becoming increasingly digital and portable.
  
  
• SWIFT
  This stands for Society for Worldwide Interbank Financial Telecommunication. Similarly to an IBAN code, this is a network that enables financial institutions to send and receive information about financial transactions. It provides secure, standardised communication for international payments and settlements, and you should use your bank’s SWIFT code for these transactions.
  
  
• Wire transfers
  Wire transfers are a common way to transfer money electronically for people who can’t make or receive EFTs. It is a service-based transaction for which you will pay a fee.

Stay on top of what’s happening with your money. While the digital era brings lots of new terminology, it also brings more convenient ways to manage your money. Review all the transactions on your account, highlight any unknown acronyms or abbreviation, and learn common terms you might be unfamiliar with. If you’re unsure, you can always chat to Enbi.