Glossary of the most often use banking terms



Account balance
these are the funds on your account on a given date.

Annual percentage rate of charge (APRC)
The annual percentage rate of charge (APRC) is an indicator for the total cost of a loan, expressed as an annual percentage rate of the disbursed loan amount. When the APRC is calculated, in addition to the agreed interest rate, all other loan-related costs are taken into account that the borrower owes to the bank. Examples of such costs are: disbursement fee, management fee, insurance premiums, collateral appraisal fee, and current account monthly maintenance fee. The APRC always exceeds the agreed interest rate on a loan. The purpose of the indicator is to ensure comparability between loan offers from different banks. APRCs on different loan offers are only comparable if the loan amount, currency, term and repayment method are identical.


Compound interest
The compound interest is formed by adding the interest accrued from the previous period to the principal amount so that it can generate interest in the following periods

Credit line
type of operational loan, disbursed to companies with regular proceeds on their bank account. The client can use a certain amount for a defined period in which he/she can take out and repay amounts, up to the credit limit, multiple times. The interest is due only on the amount used.


Deposit maturity
that is when your deposit agreement expires. Usually, that is the day when you can freely dispose of the funds on your deposit – you can withdraw it, change its term, switch the deposit type etc.


Effective Interest rate
the effective interest rate shows how much a loan actually costs. It is calculated by including not only the interest due for the respective period but also all fees commission fees, insurances and other costs related to the servicing of the loan, which are paid by the client. Also reflected in the calculation of the effective interest rate us the time when these costs are due.


Instalment due date
this is the deadline by which the instalment due needs to be paid. The due date of every instalment is indicated in the repayment schedule or in the loan agreement.

that is the cost of the disbursed funds for the period of their usage by the borrower

Interest rate
that is the percentage accrued monthly on the outstanding part of the loan


Leasing (also called financial leasing)
a form of financing in which one of the parties (called lessor), owner of a particular item, gives the right to use the item to a second party, (lessee) for a defined period and under specific repayment scheme as after the expiry of the contract, the lessee becomes the owner of the object of the leasing. Upon disbursement of leasing, the clients pay an initial leasing instalment (deductible), usually a percentage of item’s value.

Loan principle
the principle is the initial amount of the loan provided.


that is the date on which the loan agreement ends

Methods of loan repayment
- Each month the client settles equal shares of the principal and the interest for the period. In this case, the instalment varies every month, as the interest is calculated on the outstanding amount of the loan - Repayment in equal instalments (annuities) that include different amount of the principal each month and the interest due for the respective period - Flexible (Seasonal) settlement plan (сезонен) – when the client has seasonal income, a repayment schedule can be agreed, providing for larger instalments in months with higher income and lower instalments in months with lower income

Monthly instalment on a loan
that is the amount that the client has to deposit to their bank account on each month for proper repayment (settlement) of the loan. The monthly instalment includes part of the principle and the interest due for the respective month.


when using an overdraft, the client can withdraw amounts in cash or order transfers up to a certain limit above their account balance. The advantage is that the client can use it only if necessary, it is repaid with every incoming transfer to the account (no fixed monthly instalment) and the interest paid is only on the amount used and for the days in which it is used


The amount, which you deposit in the bank, is called principle. On the basis of the size of it and the interest rate, the interest is calculated.


Repayment plan
listed in the repayment plan are all the dates and amounts, which the client needs to deposit in the repayment of a loan


Simple Interest
interest charge is based only on the original principal, so interest on interest is not included.


Yearly interest rate
that is the interest rate the banks announce. It varies, depending on the term and currency. Example: That is the interest that you would receive on one-month deposit if you keep it for a year and you withdraw the interest every month.