Adverse Credit - This is the term used for people who have a poor credit history. This could include previous mortgage or loan arrears, CCJ's (county court judgements) or bankruptcy.

AER - This stands for Annual Equivalent Rate. This rate is generally quoted on interest paid to you for savings and fixed rate investments and is paid over a 12-month period. Interest paid monthly, quarterly or half-yearly represents a higher true rate than the same stated interest rate paid annually. For example, 2% interest paid monthly will work out to over 26% per year. Thus, the AER allows you to compare interest rates across accounts and reflects the total amount you can expect to earn in a year.

Affinity / Donation Cards - These are issued by credit card companies and operate as standard credit cards but a percentage of purchases made via card usage is donated to a charitable beneficiary by the issuer. A donation may also made to the beneficiary on issue or first use of the card.

APR - This stands for Annual Percentage Rate, which is the fee charged to you on any borrowings over a 12-month period. Any firm that lends money is required by law to quote the APR. Often introductory rates do not include additional fees you may be charged and also don’t reflect any higher rate of interest that your borrowings will ultimately revert to. The APR takes into account the interest and all additional borrowings, making it easier for you to compare products. In simple terms, the lower the APR, the lower the fee charged to you.

Balance Transfer - Balance transfer rates are applied to existing card debt that is being moved from one issuer to another or a consolidation of other debts. These rates tend to be lower than standard rates and apply only to the debt transferred or consolidated. The lower initial rates are used as an incentive to entice new customers. This may be for a specified term, or simply until the initial debt is repaid in full.

Bank of England - The Bank of England is the central bank of the United Kingdom.

Bankers Draft - A bankers draft is a secure way of receiving money in cheque form. The draft is a cheque which is drawn directly on the bank or building society against funds in a bank account. There is usually a fee for obtaining a bankers draft.

Base Rate - Base rate (sometimes called the repo rate) is the interest rate set by the Bank of England which determines borrowing and savings rates. Note that banks tend to charge more interest than the base rate if you are a borrower, and pay less than the base rate if you are a saver.

BSA - This stands for Building Societies' Association which is the trade association for British building societies.

Buffer Zone - These are facilities on some bank accounts whereby you can go overdrawn to a certain limit without being charged and sometimes without paying interest. For example, if you accidentally become overdrawn by a few pounds, some banks will not charge an overdraft fee for this.

Building Society - A building society is a mutual organisation owned by its members - its savers and borrowers - and not by shareholders.

Capital - Capital is the amount of money being lent or invested, not including any fees or interest. When borrowing, capital is the initial amount borrowed, not including any interest or other fees. When investing, capital is the initial amount invested, not including any interest or other gains.

Cash Card - These are plastic cards used for withdrawing cash from Automatic Teller Machines (ATMs) - also known as hole-in-the-wall machines.

CHAPS - This stands for the Clearing House Automatic Payment System. It is the electronic transfer of payment between two accounts.
Cheque - A written order directing a bank to pay money.

Child Trust Fund - The Child Trust Fund became effective on 6 April 2005, for children born on or after 1 September 2002. Children in receipt of Child Benefit will receive a sum of £250 in the form of a voucher to be used to open either a cash or equity based account on behalf of the child. At the age of 16, the child can begin to make decisions about how the money is managed, and at age 18 the account matures and the child receives the proceeds. No withdrawals are permitted during the 18 year term.

Consolidated Loan - This is a loan taken out to pay off a number of smaller debts. For example, if you have £2,000 of credit card debt and £3,000 of car repayments to make, you could possibly save money by taking out a loan for £5,000 – provided its APR is lower.

Credit Card - Credit cards are a form of borrowing used to purchase goods and services, to obtain cash advances and for consolidating debt. They enable you to make purchases without actually handing over any money at that time, and you are then required to repay the credit card company at the end of each month.

Credit Rating - This is a scoring system that lenders use to determine your risk profile. If you have an unreliable employment record, a history of not paying household bills on time, or other similar factors, you may be charged a higher interest rate for loans to hedge against the risk of lending to you.

Credit Search - This is a check a lender may take out to determine whether a person has any County Court Judgments or a record of not repaying debts.

Current Account - These are bank accounts that allow you to deposit and withdraw your own funds at will. The accounts vary in the facilities offered such as cheque guarantee cards, debit cards and overdrafts etc.

Debit Card - A debit card allows you to make purchases and withdraw cash by using funds from your bank account. These funds are automatically withdrawn from the connected account. They act as an alternative to cash and cheques.

Direct Debit - This allows an organisation to take money directly for a person’s bank account, where a regular agreement has been set up.

Early repayment charge - This is in reference to a loan. If you repay your loan more quickly than the term that you agreed to, the lender may issue a penalty charge to cover their lost future income streams from interest.

Euro - The basic monetary unit of most members of the European Union (introduced in 1999)

Fixed rate account - These are savings accounts that pay an agreed rate of interest over a defined period. This means that even if the Bank of England changes the base rate, the amount of interest that you earn will remain the same. Where rates are falling this can be a positive factor. Where rates are rising you may lose out.

FSA - This stands for Financial Services Authority who regulate the UK financial services industry.

Gross Interest - This is interest earned by deposits at banks and financial institutions, or on gilts etc. before the deduction of tax.

Guarantor - This person repays any debt incurred if you are unable to do this yourself. Some banks require a parent or guardian to sign on as guarantor before issuing their children with a bank account or credit card.

IFA - This stands for Independent Financial Adviser. These are people who are trained and authorised to give advice on financial products.

Inflation - Inflation is a general rise in prices across the economy. For example, if prices rise by 5% in a year, and your salary remains the same then you are no longer able to afford some items that used to be within your budget. If an investment or savings account pays less interest than the rate of inflation, then the actual value of your cash can diminish over time.

ISA - This stands for Individual Savings Account. ISAs protect savings and investments from income tax and capital gains tax. There are limits and restrictions to ISAs. Individuals who are both resident and ordinarily resident in the UK for tax purposes and are aged 18 and over (16 for mini cash ISAs) are eligible to subscribe to an account. The Individual Savings Account was introduced on 6th April 1999. The scheme will run initially for ten years but will be reviewed after seven years to decide on any changes which may be required at the end of the scheme.

LIBOR - LIBOR stands for the London Interbank Offered Rate and is the rate of interest at which banks borrow funds from other banks, in marketable size, in the London interbank market.

Maxi ISA - This is a tax-free savings vehicle in which you can invest up to £7,000 each year. You can invest either the full amount in stocks and shares or up to £3,000 in cash savings and up to £1,000 in life insurance investments.

Mini Cash ISA - This is a tax-free savings vehicle in which you can save up to £3,000 in cash each year.

Monthly Income Accounts - Savings accounts that pay interest on a monthly basis.

Mortgage - This is a loan used to buy a property. The property is used as security against paying back the loan, and should you become unable to pay the loan, the lender will reclaim the property.

Mortgage payment protection - This is an insurance policy for a mortgage. If you cannot work or are made redundant this policy will pay your mortgage for you.

National Savings & Investments - The government savings scheme.

Net Interest - Interest earned once basic level tax has been deducted.

Notice Accounts - These savings accounts require notice to be given to withdraw funds to avoid any penalty, such as loss of interest.

Offshore Accounts - Many banks provide offshore accounts based in the Channel Islands and the Isle of Man. Gross interest is paid into the account but has to be declared as income. This protects you from paying capital gains tax on interest, and can save you money if your basic rate of tax is lower than the capital gains rate.

Overdraft - Banks will often allow you to withdraw more funds than are actually held in your current account. If you have arranged for an overdraft facility on your account you will be charged an authorised overdraft rate - the rate of interest that you will pay on your overdrawn. If you have not arranged an overdraft facility or exceed your authorised limit you will be charged interest at the unauthorised overdraft rate, which is much higher.

Overpayment - This is when monthly repayments to a loan or mortgage are increased, meaning that the loan is repaid before the end of the term. Some loans and mortgages will have an agreed maximum overpayment amount that you can make before incurring penalties.

Packaged Account - An account that charges a monthly fee but often offers benefits such as free travel insurance and reduced overdraft rates.

Pension - Money you get at retirement either from a personal plan or the government.

Personal Loan - A loan taken out by an individual over a fixed term, with no collateral or security given to the lender.

Regular Savings Accounts - A number of banks and buildings societies offer regular savings accounts. These require a deposit to be paid into the account each month. These accounts often give a higher rate of interest than a normal savings account. However, they usually come with a restriction on the number of withdrawals (and missed deposits), which if exceeded can mean a dramatic drop in the rate of interest paid.

Secured Loan - A secured personal loan is one in which some of your property (home, stocks and shares, etc) is held, by the lender, as security for the amount you have borrowed. Secured loans usually offer lower interest rates than unsecured ones since there is less risk of default.

Standing Order - An authorized payment that instructs the regular payment of funds.

Store Card - Store cards are a form of credit card but are issued by or for a particular retailer and can only be used in that retailer's store's) / chain (unless it is endorsed by a credit card company). They often come with benefits particular to the store, such as discounts on products or advanced invitation to sales. However, they also tend to come with some of the highest interest rates in the market.

SVR - This stands for Standard Variable Rate. This is the standard interest rate charged by lenders. The rate goes up and down (is variable) and your repayments will be adjusted accordingly.

TESSA Only ISAs - Tax-Exempt Special Savings Accounts, or TESSAs, were five-year savings accounts which enabled you to receive gross interest - without the deduction of any tax. The TESSA was replaced by the ISA on 6 April 1999. However, TESSAs in existence at that date were allowed to continue to run to maturity under normal TESSA rules. The last TESSAs, therefore, matured on 5 April 2004. Maturing TESSA (Tax Exempt Special Savings Account) capital could be deposited into a TESSA Only ISA until 5 October 2004 without affecting the amount that can be invested into the cash component of an ISA.

VAT - This stands for Value Added Tax which is charged on most things that a person buys.