Glossary

A

AccountSee Current accounts and Savings accounts

Annual feeA 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 which allows you to withdraw money and make other transactions. Also know as a cashpoint or "hole in the wall".

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B

Bad creditIf someone has a history of defaulting on repayments they may be considered a bad credit risk for further borrowing

BalanceThe total amount of money in an account - also applies to money owed

Bank accountSee Current accounts and Savings accounts

Bank statementA complete list of transactions from an account, usually sent to an account holder each month

BankruptcyA legal process of taking over someone's financial affairs when they are declared unable to repay their debts

BenefitsMoney paid by the Government to people in need

Bounced chequeA cheque which a bank is unable to cash usually because the payee does not have enough funds in their account

BudgetA 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 societyA financial institution similar to a bank and offering many of the same services

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C

Charge cardA card which can be used to pay for goods but the total amount must be paid off at the end of each month

ChequeA printed form allowing money to be paid to a company or another person from a current account

Cheque guarantee cardA card issued by a bank which guarantees to pay cheque's up to a set limit, eg £100

ClearingThe 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 agencyA company paid by a lender to recover unpaid debts

Compound interestInterest earned by including previous interest in the calculation

ConsumerAn individual buying products or services for personal or household use

Council taxA 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

CreditBuying goods by borrowing money and paying back at a later date including interest

Credit cardA card that is used to pay for goods or services using credit

Credit limitThe maximum amount you can spend using your credit card

Credit ratingA score based on your previous history of borrowing and repaying money

Credit reference agencyA company that stores credit ratings that are used by lenders

Credit unionA non-profit organisation run by volunteer members to help people save and borrow money at low rates of interest

CreditorA person or company who lends money

CurrencyA system of money accepted within a country, eg sterling, or an area, eg euros

Current accountA 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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D

DebitTake money out of an account

Debit cardA card that allows you to spend money directly from your current account, usually issued by banks

DebtMoney owed

Debt counselorAn adviser who assists people with dealing with debt

DefaultFailing to pay an amount due by the agreed date

DepositPaying money into an account either as cash, cheque or by direct transfer

Direct debitA way to make regular payments by giving a company permission to take funds from your account

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E

EconomyFinancial activities related to the production of goods and services of a particular region or country

EquityThe 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 rateThe equivalent value used when transferring amounts of different currencies

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F

FeesCharges made by a company for their services

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G

Gross payAmount of pay earned before any deductions i.e Tax, National Insurance etc

GuarantorA person who agrees to pay a debt owed by another person if that person fails to meet agreed payments

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H

Hire purchaseA type of credit. The goods are owned by the lender until the full amount is repaid.

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I

Identity theftA crime involving the use of someone else's identity to obtain money

IncomeMoney earned as wages or received from other sources

Income taxTax paid on money earned

Individual savings account (ISA)A type of saving account which 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.

InsuranceA financial arrangement in which an insurer agrees to pay out an amount in the event that certain losses occur. You pay a regular amount for this insurance cover.

Interest1) Money paid by the bank to the holder of a savings or investment account
2) The Charge for borrowing money. Interest is expressed as a percentage known as the interest rate. See also APR

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J

Joint accountAn account opened in the name of one or more people

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L

LenderA company (or person) who lends money to a borrower

LiabilityThe responsibility for a bill or amount owed

Life assuranceInsurance policy to give a cash sum to your dependants when you die

LoanAn agreement between a lender and a borrower by which the borrower agrees to repayment of money borrowed over a period of time can be with or without interest

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M

Minimum paymentThe lowest amount that can be paid. Usually applies to credit cards monthly

MortgageA loan to buy a house or flat

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N

National InsuranceA deduction from wages which is paid to the government to build up your entitlement to a State Pension and other social security benefits

National savingsA government organisation giving a range of Savings products - accounts, bonds, etc

Net payThe 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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O

Online bankingAccessing your bank account via the internet

Outstanding balanceThe amount still owed

OverdraftAn agreement with the bank to withdraw more money from a current account than it contains - a way to borrow money

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P

PawnbrokerA money lender who hold items as security on the money being repaid

Pay periodThe period of time a wages slip covers e.g. weekly or monthly

PayeePayday loans are short-term loans for small amounts of money

PayerThe person you are paying money to

PensionA form of investment which 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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R

RepossessionTaking back goods which are secured against a loan, in the event of failing to repay. This can apply to goods bought or, in the case of a mortgage, a house or flat.

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S

SalaryAnnual earnings

Savings accountAn account designed for money to be paid in and saved, with limited facilities to access. Pays interest.

Sort codeA number which identifies the branch of your bank - shown as 6 digits appearing on cheques and guarantee cards

Student LoansSpecific type of loan organised by the Government to help students pay for living costs while studying at University

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T

Take home paySee net income

TaxMoney deducted from income and paid to the government

Telephone bankingThe facility to access your bank account using the telephone to make transactions

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U

Unsecured loanMoney borrowed without goods offered as security against non-payment

UtilitiesSuch as gas, electricity and telephone

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V

Value Added Tax (VAT)A tax paid when you buy goods or receive services

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W

WagesMoney paid to you by an employer

WithdrawalTaking money out of a bank account

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