Glossary

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Early Withdrawal Penalty: A charge that is given to holders of fixed –term investments if they withdraw their money before maturity.

Earnest Money: Money given to a seller by a buyer to demonstrate the buyer’s good faith. If the deal falls through, the deposit is usually forfeited.

Economy: The way a country manages its money and resources (such as workers and land) to produce, buy, and sell goods and services.

Electronic Banking: A service that allows an account holder to obtain account information, and manage certain banking transactions, through a personal computer or other electronic device via the financial institution's Web site on the Internet. (This is also known as Internet or online banking.)

Electronic Check Conversion: A process in which your check or draft is used as a source of information-for the check number, your account number, and the number that identifies your financial institution. The information is then used to make a one-time electronic payment from your account (an electronic fund transfer). The check itself is not the method of payment.

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.)

Electronic Funds Transfer Act (EFTA): Signed by President Jimmy Carter in 1978, the act is intended to protect individual consumers engaging in electronic fund transfers (EFTs).

Embezzlement: In most States, embezzlement is defined as theft/larceny of assets (money or property) by a person in a position of trust or responsibility over those assets.

Encoding: The process used to imprint or inscribe MICR characters on checks, deposits, and other financial instruments. (Magnetic Ink Character Recognition (MICR) is a character recognition technology adopted mainly by the banking industry to facilitate the processing of checks. Each check in encoded at the bottom with the dollar amount of the check. If that information is entered incorrectly, there is an encoding error.)

Equal Credit Opportunity Act (ECOA): Prohibits creditors from discriminating against loan applicants on the basis of race, color, religion, national origin, sex, marital status, age, or because an applicant receives income from a public assistance program.

Error Resolution: The required process for resolving errors involving electronic transfers to and from deposit accounts.

Escheat: Transferring savings accounts to the State when 1) a person dies without leaving a will and has no heirs, or 2) when the property (such as a bank account) has been inactive for a certain period of time.

Escrow: The holding of money or documents by a neutral third party before closing on a property. It can also be funds held in reserve by a financial institution or mortgage company to pay taxes, insurance, and other mortgage-related items when due.

Escrow Analysis: The periodic examination of escrow accounts by a mortgage company to verify monthly deposits are sufficient to pay taxes, insurance, and other escrow-related items on when due.

Estate Account: An account held in the name of a decedent that is administered by an executor or administrator of the estate.

Exception Hold: A period of time that allows a financial institution to exceed the maximum hold periods defined in the Expedited Funds Availability Act.

Exchange Rate: The amount a dollar is worth when you exchange it for money from another country. In other words, the price of one country’s currency expressed in another country’s currency.

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