Glossary

Description of Terms

Accrual - The act of building up an accumulation. Interest accrual means the building up of interest     on your account.

AER - Annual Equivalent Rate - this describe the interest rate the bank will pay you on savings as an annual rate. It is the savings equivalent of the APR

APR -  also called nominal APR, and the term effective APR, also called EAR, describe the interest rate for a whole year (annualized), rather than just a monthly fee/rate, as applied on a loan, mortgage, credit card etc. It is a finance charge expressed as an annual rate.

Assets - Any item of economic value owned by an individual or corporation , especially that which could be converted to cash.

Annuity - A form of insurance or investment entitling the investor to a series of annual sums.

Arrangement Fee - A sum of money you have to pay to have a loan or credit arranged for you.

Bad Debt - is debt that is unlikely to be paid.

Balance - the amount of money you have in an account at any one time.

Balance Sheet - is a financial statement that summarizes a company's assets, liabilities and shareholders' equity at a specific point in time.

Bank Charges - are charges and fees made by a bank to their customers.

Bankruptcy - or insolvency is a legal status of a person or an organisation that cannot repay the debts it owes to its creditors.

Base Rate - the interest rate set by the Bank of England for lending to other banks.

Broker - is a party that arranges transactions between a buyer and a seller, and gets a commission when the deal is executed.

Bond - A bond is a formal contract to repay borrowed money with interest at fixed rates and intervals.

Budgeting - forecasting of income and expenditure, carried out to ensure that an individual or individuals do not overspend.

Bursary - a monetary award made by an institution to an individual or a group to assist the development of their education.

Cap - An upper limit on the interest rate on a variable rate loan or mortgage.

Capital - Principal amount of money that you have loaned or borrowed - does not include interest earned.

Capital Gains Tax - is a tax charged on the profit realised from the sale of an asset that was purchased at a lower price.

Card Limit - is the maximum amount of credit that a bank or other lender will extend to an individual or company on their credit card.

Cashback - offers are a type of rewards program where the cardholder receives a cash rebate equal to a specified percentage of the amount charged to the card on an annual basis.

Cash Flow - is the movement of cash into or out of a business, project, or financial product.

CCJ - see County Court Judgement.

Charge Card - is a plastic card that provides an alternative payment to cash when making purchases in which the issuer and the cardholder enter into an agreement that the debt incurred on the charge account will be paid in full and by due date.

Citizens Advice Bureau (CAB) - A local office where you can get free advice on a range of problems including legal, finance and debt.

Collar - Both an upper and lower limit on the interest rate on a variable rate loan or mortgage, meaning that the rate cannot move outside of a given range.

Commission - payment for services rendered or products sold. Payments maybe a fixed amount or will be calculated as a percentage of the goods sold.

Compound Interest - arises when interest is added to the principal, so that from that moment on, the interest that has been added also itself earns, or costs interest.

Corporate Bond - It is a bond that a corporation issues to raise money in order to expand its business.

Council Tax - is a tax imposed by local authorities i.e. City Councils, which is based on the general estimated value of a property.

County Court Judgement -  is an order made by a County Court for a debt to be repaid in England and Wales.

Court Record - is a documentary account of what happened in an action or proceeding, which includes the court file, exhibits and transcripts.

CPI - or Consumer Price Index is the official inflationary indicator that measures the change in the cost of a fixed basket of products and services, including housing, electricity, food, and transportation.

Credit Card - is any card issued by a finance company that may be used repeatedly to borrow money or buy products and services on credit up to a pre-defined limit.

Credit File - is a record containing historical data on open or fully paid credit accounts. Credit files may contain personal financial statements, credit applications, and comments by credit analysts, as well as the current status of the account, payment history, current balance, credit limit, and so on.

Credit History - is a report furnished by a credit bureau when requested by a lender or the individual named in a report. A credit report lists available credit and a borrower's payment history including on-time payments, late payments, and the number of times a loan payment was missed.

Credit limit - The maximum amount of credit you have been given.

Credit Score - A numeric expression of a person's creditworthiness that is used by lenders to access the likelihood that a person will repay his or her debts. A credit score is based on, among other things, a person's past credit history. It is a number between 300 and 850 - the higher the number, the more creditworthy the person is deemed to be.

Creditor - a person or company to whom money or its equivalent is owed.

Current Account - Non interest-bearing bank account which allows the accountholder to write cheques against, or withdraw cash from the funds in the account.

C.V. - or curriculum vitae, is a written description of your work experience, educational background, and skills.

Debit Card - A bankcard used to make an electronic withdrawal from funds on deposit in a bank, as in purchasing goods or obtaining cash advances.

Debt - Something owed, such as money, goods, or services.

Debt Counsellor - a person who offers professional advice on methods of debt repayment.

Default - Failed to make a payment on a debt.

Depreciation - A decrease or loss in value, as because of age, wear, or market conditions.

Defined Contribution - A retirement plan in which a certain amount or percentage of money is set aside each year by a company for the benefit of the employee.

Deflation - Reduction of the general level of prices in an economy.

Direct Cost - A cost that can be directly related to producing specific goods or performing a specific service. For example, the wages of an employee engaged in producing a product can be attributed directly to the cost of manufacturing that product.

Direct Debit - A Direct Debit is an instruction from a customer to their bank or building society authorising an organisation to collect varying financial amounts from their account.

Disposable Income - The amount of money that individuals or households have available for spending and saving after income taxes have been accounted for.

Economic Indicators - Statistical data showing general trends in the economy.

EAR - see Effective APR

Effective APR - is the fee+compound interest rate (calculated across a year).

Electoral Roll -  or electoral register, is a listing of all those registered to vote in a particular area.

Equity - A stock or any other security representing an ownership interest.

Excess - The amount of money you have to pay toward the full settlement of an insurance claim.

Expenses - Money spent or cost incurred in an organization's efforts to generate revenue, representing the cost of doing business.

Final Salary Scheme - pension paid to a person which is based on how much they are earning when they retire.

Fixed Assets - Assets that are purchased for long-term use and are not likely to be converted quickly into cash, such as land, buildings, and equipment.

Fixed Costs - A cost that remains constant, regardless of any change in a company's activity. An example might be rent.

Fixed Rate - A loan in which the interest rate does not change for a specified period of the loan. Opposite of variable rate.

Font - is a set of printable or displayable text characters in a specific style and size.

FSA - Financial Services Authority is an independent, non-governmental body that regulates the financial services industry in the UK.

Gilt - A bond issued by the UK government.

Grant - A sum of money given by an organization for a particular purpose.

Gross Interest - interest paid on an investment, security, savings or deposit account before taxes or other charges are deducted.

Gross Salary - salary paid before tax has been taken from it.

Gross Profit - profit earned before taxes have been taken from it.

HCJ - see High Court Judgement.

High Court Judgement - is an order made by a High Court for a debt to be repaid in England and Wales.

Hire Purchase - Type of loan agreement whereby you can take away and use the goods whilst still making regular payments for them.

HTML - Short for HyperText Markup Language, the authoring language used to create documents on the World Wide Web.

IFA - see Independent Financial AdviserIncome Tax - is a government tax levied directly on personal income.

Independent Financial Advisor -  is an independent expert who is authorised to sell or advise on the policies offered by insurance companies, as well as other financial service providers, such as banks and building societies.

Inflation - A general increase in prices and fall in the purchasing value of money.

Insolvency - see Bankruptcy

Insolvency Practitioner - a person (usually an accountant or solicitor) authorised by the insolvency service to act as a liquidator or administrator.

Instant Access - Ability to withdraw cash immediately, with no notice period.

Insurance - A promise of compensation for specific potential future losses in exchange for a periodic payment.

Interest Income - income derived from interest earned on investment.

Interest Rate - A rate which is charged or paid for the use of money.

Internship - A student or a recent graduate undergoing supervised practical training.

Inventory - A detailed, itemized list, report, or record of things in one's possession,

Investment - An asset or item that is purchased with the hope that it will generate income or appreciate in the future.

Investment Trust - fund established to produce income through investments.

ISA - Individual Savings Account: an investment account in which there is no tax on income and there is no tax on profits made from an increase in the value of shares.

Job Seekers Allowance - Money that the government pays to people who do not have a job but who are looking for one.

Land-line - permanent telephone line into a residence or business.

Liability - is a debt assumed by an individual or business entity as a result of its borrowing activities.

LIBOR - London Inter-Bank Offer Rate, reference interest rate that the banks fix for loans each day.

Limited Company - A limited company is a business that has been registered in such a manner as to ensure that its owners have limited liability.  The business is owned by its shareholders and operated by directors.

Loan - An amount of money that you borrow which has to be repaid in the future, usually with interest.

Loyalty Card - A card given to you by some shops which gives you points for purchases, which can later be exchanged for goods.

Maintenance Loan - The maintenance loan for students is a means tested loan given to students to help them pay their living costs while studying.

Margin - is the difference between the interest rate charged to a customer and the rate charged to a bank.

Maturity - The length of time until the principal amount of a loan must be repaid.

Minimum Wage - Lowest hourly rate an employer can legally pay an employee.

Mortgage - long term loan taken to buy a property which has a property a security against it.

National Insurance Contributions - Payments deducted from pay or declared through self assessment, used by the government to fund the state pension and other state benefits.

Net Salary - salary paid after tax and other deductions have been taken from it.

Net Profit - profit earned after taxes have been taken from it.

NHS - The National Health Service is the publicly-funded healthcare system of the United Kingdom.

NIC - see National Insurance Contribution.

Nominal APR - The nominal APR is the simple-interest rate (for a year).

Non-Priority Debts - Less important debts which are likely to accept reasonable, altered repayments.

Notice Period - Finance - The period of time you must wait to get your money after advising your bank that you want to withdraw it.

Notice Period - Employment - The amount of time you have to wait before leaving your job after advising your employers of your intentions.

NS & I - state-owned investments organization.

Overdraft - Loan arrangement  under which a bank extends credit up to a maximum amount (called an overdraft limit) against which a current account customer can write cheques or make withdrawals.

Overhead - The operating expenses of a business, including the costs of rent, utilities, interior decoration, and taxes, exclusive of labor and materials.

Payday Loan - is a small, short-term loan that is intended to cover a borrower's expenses until his or her next payday. It usually has a very high APR associated with it.

PAC Code - Porting Authorisation Code is a unique identifier used by mobile telephone network providers to enable mobile number portability.

PAYE - a system by which income tax levied on wage and salary earners is paid by employers directly to the revenue.

PAYG - type of mobile phone account where usage is paid for in advance.

PDF File - Stands for "Portable Document Format." It is a multi-platform file format developed by Adobe Systems. A PDF file captures document text, fonts, images, and even formatting of documents from a variety of applications.

Pension - is a private or government fund from which intermittent and regular benefits or allowances are paid, normally after retirement.

Personal Pension Plan - is a UK tax efficient individual investment vehicle, with the primary purpose of building a capital sum to provide retirement benefits.

PIN - Personal Identification Number which is a secret number for use with a cash, debit or credit card. It is also used for online banking.

PPP - see personal pension plan.

Priority Debts - Important debts because failure to pay them means that the law can take serious action againsy you. Not normally re-negotiable.

Premium Bond - a government bond that bears no interest or capital gains but enters the holder into lotteries.

Ratings Agency - is an organization which gives a rating to companies or other individuals borrowing money.

Redundancy - dismissal for a job for a reason not related to the individual concerned or for a number of reasons all of which are not so related.

Referee - somebody who comments on another's character and qualifications, normally in relation to a job application.

Retirement - The period of a person's life during which he/she is no longer working.

Revenue - The amount of money that a company or individual actually receives during a specific period.

Rights - the protection you are given by the law.

RPI - measure of the general level of inflation as reflected in the retail price of a basket of goods and services such as energy, food, petrol, housing, household goods, mortgage interest, fares etc.

Savings Account - A deposit account held at a bank or other financial institution that provides principal security and a modest interest rate. It is not possible to withdraw money by cheque.

Scholarship - A type of financial aid, given by a school or college, in the form of a grant that does not have to be repaid by the recipient.

Shares - Certificate representing one unit of ownership in a corporation.

Stamp Duty - is a tax on legal documents such as those used for the sale or purchase of shares or the conveyance of a property to a new owner.

Standing Order - Type of reauthorized-payment under which an accountholder instructs a bank to pay a specified amount directly from his or her account balance to a named party on a regular basis.

State Pension - is a pension paid by the government.

Statutory Sick Pay - is paid by their employer to all employees who are sick for a period longer than 4 consecutive days but less than 28 weeks.

Stockbroker - someone that acts as an agent in the buying and selling of stocks or other securities.

Store Card - is a card that is used to buy goods on credit from a particular store or group of stores.

Student Loan - is a loan given by the government that is designed to help students pay for university tuition, books, and living expenses.

Tax Code - a number given by the revenue to indicate the amount somebody can earn before tax has to be paid.

Tax Rebate - is a refund on taxes when the tax liability is less than the taxes paid.

Tax Return - is a form on which a taxpayer makes an annual statement of income and personal circumstances, used by the tax authorities to assess liability for tax.

Taxable Wage - is the sum of all earnings by an employee that are eligible for a particular type of tax.

Tax Year - The 12 month period running from 6th April of one year to 5th April the next.

Tenancy Agreement - The tenancy agreement is a contract between a tenant and a landlord.

Term - The time for which something lasts.

Tracker Mortgage - is a variable-rate mortgage where the amount of interest paid on the loan is linked to the Bank of England base rate by a fixed differential.

Travellers Cheques - a cheque in various denominations and currencies sold for use abroad by a bank, etc., to the bearer, who signs it on purchase and can cash it by signing it again.

Unit Trust - s an organization which invests money in many different types of business and which offers units for sale to the public as an investment.

Utilities - Businesses that provide the public with necessities, such as water, electricity and gas.

VAT - Value Added Tax is an indirect tax, which is imposed on goods and services at each stage of production, starting from raw materials to final product.

Visa - A passport stamp or document that authorizes the passport-holder to enter a country for specific purposes for a particular time period

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