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| Glossary |
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| Account |
See current accounts and savings accounts. |
| Annual fee |
A charge made once a year for a financial service
such as a credit card or charge card. |
| Annual percentage rate (APR) |
The total cost of a loan expressed as a percentage
for one year, including interest and any charges. |
| Automated Teller Machine (ATM) |
A machine that allows you to withdraw money and
make other transactions. It is also known as a cashpoint or
‘hole in the wall’. |
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| Bad credit |
People with a history of defaulting on repayments
are considered a bad credit risk for further borrowing. |
| Balance |
The total amount of money in an account, also applies to
money owed. |
| Bank account |
See current accounts and savings accounts. |
| Bank statement |
A complete list of transactions from an account, usually sent
to an account holder each month. |
| Bankruptcy |
A legal process of taking over someone's financial affairs
when they are declared unable to repay their debts. |
| Benefits |
Money paid by the government to people in need. |
| Bounced cheque |
A cheque that a bank is unable to cash because there are
not enough funds in the account holder’s account. |
| Budget |
A list of income and expenditure for a period of time. Shows
money coming in, money to be spent and any amount left at the
end. |
| Building society |
A financial institution similar to a bank and offering many
of the same services. |
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| Charge card |
A card which can be used to pay for goods, but
the total amount must be paid off at the end of each month. |
| Cheque |
A printed form allowing money to be paid to a
company or another person from a current account. |
| Cheque guarantee card |
A card issued by a bank which guarantees to pay cheque's up
to a set limit, eg £100. |
| Clearing |
The process of moving money from one bank account to another.
This can take a number of days. The money is unavailable until
the funds have cleared. |
| Collection agency |
A company paid by a lender to recover unpaid debts. |
| Compound interest |
Interest earned by including previous interest in the calculation. |
| Consumer |
An individual buying products or services for personal or
household use. |
| Council tax |
A tax paid to the local authority, per household and based
on the value of the property. |
| County Court Judgment (CCJ) |
An order made by the County Court for money to be repaid. |
| Credit |
Buying goods by borrowing money and paying back at a later
date including interest. |
| Credit card |
A card that is used to pay for goods or services using credit. |
| Credit limit |
The maximum amount you can spend using your credit card. |
| Credit rating |
A score based on your previous history of borrowing
and repaying money. |
| Credit reference agency |
A company that stores credit ratings that are used by lenders. |
| Credit union |
A non-profit organisation run by volunteer members to help
people save and borrow money at low rates of interest. |
| Creditor |
A person or company who lends money. |
| Currency |
A system of money accepted within a country, eg sterling,
or an area, eg euros. |
| Current account |
A type of bank account used for every day transactions including
paying in wages and using cheque's, standing orders and direct
debits. |
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| Debit |
Take money out of an account. |
| Debit card |
A card that allows you to spend money directly
from your current account, usually issued by banks. |
| Debt |
Money owed. |
| Debt counselor |
An adviser who assists people with dealing with debt. |
| Default |
Failing to pay an amount due by the agreed date. |
| Deposit |
Paying money into an account either as cash, cheque or by
direct transfer. |
| Direct debit |
A way to make regular payments by giving a company permission
to take funds from your account. |
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| Economy |
Financial activities related to the production
of goods and services of a particular region or country. |
| Equity |
The financial difference between the market value
of an asset and the amount of loan or mortgage still outstanding
on it. Usually applied to home ownership. |
| Exchange rate |
The equivalent value used when transferring amounts
of different currencies. |
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| Fees |
Charges made by a company for their services. |
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| Gross pay |
Amount of pay earned before any deductions, ie
tax, National Insurance etc. |
| Guarantor |
A person who agrees to pay a debt owed by another
person if that person fails to meet agreed payments. |
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| Hire purchase |
A type of credit. The goods are owned by the lender
until the full amount is repaid. |
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| Identity theft |
A crime involving the use of someone else's identity
to obtain money. |
| Income |
Money earned as wages or received from other sources. |
| Income tax |
Tax paid on money earned. |
| Individual savings account (ISA) |
A type of savings account that offers tax-free interest. |
| Individual voluntary arrangement (IVA) |
A legal agreement between the debtor and creditors to repay
part of the debts over a specified period of time. Can be an
alternative to bankruptcy. |
| Insurance |
A financial arrangement in which an insurer agrees to pay
a sum when losses occur. You pay a regular amount for this insurance
cover. |
| Interest |
(i) Money paid by the bank to the holder of a savings or investment
account.
(ii) The charge for borrowing money. Interest is expressed as
a percentage known as the interest rate. See also APR. |
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| Joint account |
A bank account opened in the name of two or more
people. |
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| Lender |
A company (or person) who lends money to a borrower. |
| Liability |
The responsibility for a bill or amount owed. |
| Life assurance |
A policy that pays a lump sum on the death of the policyholder. |
| Loan |
An agreement between a lender and a borrower. The borrower
agrees to repay the money over a period of time (often with
interest). |
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| Minimum payment |
The lowest amount that can be paid. Usually applies
to monthly credit card payments. |
| Mortgage |
A loan to buy a house or flat. |
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| National Insurance |
A deduction from wages that is paid to the government.
It is used to build up your state pension and other social security
benefits. |
| National savings |
A government organisation giving a range of savings products,
eg accounts, bonds. |
| Net pay |
The amount of wages paid to you after deductions such as
tax and National Insurance. Gross pay minus deductions equals
net pay. Also called ‘take-home’ pay. |
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| Online banking |
Accessing your bank account via the internet. |
| Outstanding balance |
The amount still owed. |
| Overdraft |
An agreement with the bank to withdraw more money from a current
account than it contains. |
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| Pawnbroker |
A moneylender who hold items as security on the
money being repaid. |
| Pay period |
The period of time a payslip covers, eg weekly or monthly. |
| Payee |
The person you are paying money to. |
| Payer |
The person paying the money. |
| Pension |
A form of investment that pays out a regular amount to you
when you retire. |
| Personal identification number (PIN) |
A four-digit code used as security to access bank accounts. |
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| Repossession |
Taking back goods that are secured against a loan,
due to failure to repay. This can apply to goods bought or,
in the case of a mortgage, a house or flat. |
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| Salary |
Annual earnings. |
| Savings account |
An account designed for money to be paid in and saved. Pays
interest. |
| Sort code |
A six-digit number which identifies the branch of your bank.
It appears on cheque's and guarantee cards. |
| Student loans |
A specific type of loan organised by the government to help
students pay for living costs while studying at university. |
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| Take home pay |
See net income. |
| Tax Money |
deducted from income and paid to the government. |
| Telephone banking |
The facility to access your bank account using the telephone
to make transactions. |
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| Unsecured loan |
Money borrowed without goods being offered as
security against non-payment. |
| Utilities Services |
such as gas, electricity and telephone. |
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| Value added tax (VAT) |
A tax paid when you buy goods or receive services. |
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| Wages |
Money paid to you by an employer. |
| Withdrawal |
Taking money out of a bank account. |
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