Annual Percentage Rates (APR)
APR is used to describe the true cost of money borrowed via a mortgage, loan or credit card. This enables you to make a direct cost comparison between different forms of finance.
Automated Teller Machine (ATM)
Sometimes referred to as cash machines or cash points, ATMs are found in public, accessible locations throughout the UK and overseas. At an ATM, you can check your bank balance and withdraw money (up to a certain amount – usually £250). To do this, you will need a cash card and your PIN (Personal Identification Number).
Balance
A positive balance refers to the amount of money that you have in your bank account, whereas a negative balance is what you currently owe.
Budget
A budget is a plan that helps you manage your money, typically by calculating your predicted expenditure and income over a period of time (allowing you to make adjustments as necessary if you have any difficulty meeting your spending requirements).
Building society
Similar to a bank, a building society is an institution that offers a range of financial services (to let you save or borrow money); however, unlike a bank, a building society is owned by its customers/members.
Citizens Advice
An organisation – of mainly volunteers – that you can consult for impartial, free advice on a range of topics (finances, careers, legal matters).
Council tax
A tax paid by property owners or tenants in England, Wales and Scotland. The tax is paid to the local council, which uses the funds for its services.
Credit rating
A report that estimates how risky it would be to lend money to a person or organisation, based on a number of factors including their credit history. A poor credit score can make it difficult to apply successfully for a mortgage (or even a mobile phone) in future, so it is important to keep on top of things. Making payments on time, not exceeding your overdraft limit, and eliminating your credit card balance are some of the ways you can maintain a good credit rating.
Curriculum Vitae (CV)
A document that states your personal information, a personal statement, achievements, qualifications, skills and employment/educational history. Required by most potential employers when applying for a job.
Deposit
Money that you pay into an account. If you pay a deposit for something you are buying (and intend to pay for in full later), you pay a percentage of the total amount. If you are making a rent deposit, you will normally be expected to pay a percentage of your rent in advance to the landlord – such as the first month.
Direct Debit
An agreement that you make with your building society or bank which authorises them to allow regular payments to be taken from your account (such as for your monthly mobile phone bill). Differs from standing orders in that the amount is not fixed and can vary from bill to bill depending on how much of the service you’ve used.
Electronic payment
When you make payments via the internet (or via a bank or building society’s intranet), these are known as electronic payments.
Excess (insurance)
If you wish to make an insurance claim, you’ll be expected to pay the first part of the cost – this is known as the ‘excess’ (a set amount that’s specified as part of your policy).
Financial Conduct Authority (FCA)
The FCA was formed to ensure that markets work well so that consumers get a fair deal. It has three main objectives: to protect consumers; to help maintain competitive markets; and to improve the UK financial system.
Fixed rate interest
An interest rate that stays the same for a set period of time. It’s not affected by inflation or the base rate (which is set by the Bank of England).
Fraud
A crime that’s committed when people trick or deceive others (or organisations) for financial gains.
Her Majesty’s Revenue & Customs (HMRC)
The department of UK government that’s responsible for collecting tax and paying certain benefits.
Identity fraud
A crime that’s committed when someone uses your name or details for his/her own gain (such as to get access to the money in your bank account).
Inflation
When wages or prices increase in comparison with previous years.
Insurance
If you pay for insurance, you’re paying money to a company on the understanding that they’ll reimburse you for the cost of something if it’s stolen, lost, or damaged in future.
Interest
The extra money that you have to pay back if you’ve borrowed money (such as if you take out a loan). Or the extra money that’s paid to you by a building society or a bank when you save your money with them.
Interest-free period
A time during which you’re not charged interest.
Interest rate
A percentage paid by borrowers on their loans or by banks/building societies to savers.
Internet banking
Doing financial transactions online.
In the black
When you have a positive balance in your account or as part of your budget.
In the red
When you have a negative balance in your account or as part of your budget.
Maintenance loan
A type of student loan that’s intended to help cover basic living and study costs (such as food, course materials, travel and rent).
Mortgage
Money that’s lent to a person or company when they buy a property.
Overdraft
An amount of money that is linked to your current account and that a building society or bank lets you ‘borrow’, in case you spend more money than you have. The ‘borrowed money’ usually has an extra charge – e.g. it may cost you £1 a day to be overdrawn – with the exception of many student bank account providers who offer a fee-free overdraft facility for the duration of your studies.
Pay As You Earn (PAYE)
An employment system by which the tax you owe to the government is taken off your wage before you receive it. You are given a tax code which will also appear on any wageslip.
Personal Identification Number (PIN)
A code of four numbers that you type in to use a credit or debit card to buy goods or services (the code should be memorised by you alone and not shared with anyone else).
Phishing
A scam – conducted via electronic communications – by which a criminal will pose as a legitimate organisation in order to get your personal information.
Policy (insurance)
A contract between you and your insurance company, detailing what’s covered (and what isn’t), the length of cover, and the cost (including excess).
Prudential Regulatory Authority (PRA)
Part of the Bank of England, the PRA was created by the Financial Services Act (2012). It has two main objectives: to enhance the safety and integrity of financial firms; and to ensure that there is an appropriate level of protection for policyholders (specifically in terms of insurance).
Retail Price Index (RPI)
One of the two main measures of consumer inflation in the UK (the other is the Consumer Prices Index). It is published monthly by the Office for National Statistics and shows the percentage price rise of goods over the previous twelve months. RPI is used when calculating increases in the State Pension, many private pensions, some state benefits and student loan rates.
Scam
A scheme to get personal details or money by deceptive means (such as identity fraud).
Smishing
A scam – conducted via mobile phone – by which a criminal will pose as a legitimate organisation in order to get your personal information.
Solvent
Being able to pay off your debts and clear your financial liabilities.
Sort code
The six-digit number given to all building society or bank account holders that identifies their branch. You will need to use this whenever you set up payments.
Standing order
An instruction to your bank or building society to make frequent payments of a set amount of money from your account to another person or company. Differs from direct debit payments in that the amount taken from your account cannot vary from month to month; and whilst standing orders are an agreement with your bank, direct debits give permission to a company to take money from your account.
Student bursaries/scholarships
A reduction in fees or financial aid, given by an institution (such as a university) to eligible students.
Student halls
Buildings that are used primarily as residential quarters for students within a university or college.
Tuition fees
The fees that are charged by an institution or course provider for instruction. If you’re from the UK and wish to study here, you will pay up to a maximum of £9,000 per year.
Tuition fee loan
A type of student loan that covers the costs of a higher education course. Paid directly from a regional funding body to the course provider. You will start paying this back when you earn over £21,000 per annum.
Telephone banking
Using the telephone to carry out your banking activity, rather than banking online or going into a branch.
Tenant
A person who rents the place in which they work or live.
Transaction fee
A charge applied by your bank for certain types of transactions, typically using your debit or credit card abroad, or paying in/receiving foreign currency.
Twishing
A scam – conducted via Twitter or social media – by which a criminal will pose as a legitimate organisation in order to get your personal information.
Utility bills
Documents that detail the charges for using water, electricity, gas or telephone.
Vishing
A scam – conducted via telephone – by which a criminal will pose as a legitimate organisation in order to get your personal information.