Banking Vocabulary Quiz
12 multiple-choice questions on banking and finance vocabulary: accounts, loans, interest, cards, transfers and everyday money terms. B1–B2 level.
Banking Vocabulary — FAQ
A current account (called a 'checking account' in American English) is used for everyday spending — paying bills, receiving your salary and using a debit card. It usually pays little or no interest. A savings account is designed to hold money you do not need immediately; it pays interest on your balance but may limit how often you can withdraw. Many people keep both.
Interest is the cost of borrowing money, or the reward for saving it. When you take out a loan, you pay interest to the bank on top of the amount you borrowed. When you save, the bank pays you interest. It is expressed as a percentage per year, known as the interest rate or APR. Compound interest means you earn interest on your interest as well as on your original sum.
A debit card takes money directly from your current account, so you can only spend money you already have. A credit card lets you borrow money up to a set limit; you repay it later, with interest charged on any balance you do not pay off in full each month. Debit cards help you avoid debt, while credit cards offer flexibility but can lead to debt if misused.
An overdraft is when you spend more than you have in your current account, so your balance goes below zero. An 'arranged' overdraft is agreed in advance up to a limit, while an 'unarranged' overdraft happens without prior agreement and usually has higher fees. The bank lends you money for a short period, and you pay interest or charges on the amount you are overdrawn.
A mortgage is a long-term loan used to buy property. The property acts as security: if you fail to keep up repayments, the lender can repossess it. Mortgages are usually repaid over many years — often 25 or 30 — with monthly payments covering both the capital and the interest. A 'deposit' is the lump sum you pay upfront before the mortgage covers the rest.
To 'deposit' money means to put it into your bank account. To 'withdraw' means to take it out — for example, from a cash machine (ATM). The noun forms are 'a deposit' and 'a withdrawal'. You might say: 'I deposited my salary on Friday and withdrew some cash for the weekend.' These are two of the most common verbs in everyday banking English.
Both make regular automatic payments from your account. A standing order pays a fixed amount on regular dates — useful for rent. A direct debit gives a company permission to collect varying amounts, such as a utility bill that changes each month. With a direct debit the company controls the amount; with a standing order, you do.
Your balance is the amount of money currently in your account. A positive balance (being 'in credit') means you have money available. A negative balance (being 'in the red' or overdrawn) means you owe the bank money. 'In the black' means a positive balance — these idioms come from the colours traditionally used in accounting ledgers.
A loan is a fixed sum you borrow and repay in instalments over an agreed period, with interest. 'Credit' is broader, meaning the ability to borrow money or obtain goods before paying — for example, a credit card. So a loan is one specific form of credit. In British English, 'credit' can also mean having money in your account (being 'in credit'), so context matters.
English has many money idioms: 'to bank on something' (to rely on it), 'to break the bank' (to cost too much), 'to be in the red' (to owe money), 'to be in the black' (to have money / make a profit), 'to tighten your belt' (to spend less), 'to make ends meet' (to have just enough), 'a nest egg' (savings for the future), and 'to pay through the nose' (to pay far too much).