What is "bank discount"

Bank discount \Bank discount\ A sum equal to the interest at a given rate on the principal (face) of a bill or note from the time of discounting until it becomes due.

Discount \Dis"count`\, n. [Cf. F. d['e]compte. See Discount, v. t.]

1. A counting off or deduction made from a gross sum on any account whatever; an allowance upon an account, debt, demand, price asked, and the like; something taken or deducted.

2. A deduction made for interest, in advancing money upon, or purchasing, a bill or note not due; payment in advance of interest upon money.

3. The rate of interest charged in discounting.

   At a discount, below par, or below the nominal value; hence, colloquially, out of favor; poorly esteemed; depreciated.

   Bank discount, a sum equal to the interest at a given rate on the principal (face) of a bill or note from the time of discounting until it become due.

   Discount broker, one who makes a business of discounting commercial paper; a bill broker.

   Discount day, a particular day of the week when a bank discounts bills.

   True discount, the interest which, added to a principal, will equal the face of a note when it becomes due. The principal yielding this interest is the present value of the note.

n. interest on an annual basis deducted in advance on a loan [syn: discount rate, discount]