Jargon buster

Commonly used terms explained:

Account balance

• The exact amount of money in an account

APR

• APR stands for Annual Percentage Rate and is the interest payable on the amount borrowed and other charges expressed as an annual rate charge
• It is the way the law requires firms to show their interest rates
• See our FAQs for more details

Assets

• Things that are owned such as cars, property and money

Automated teller machine (ATM)

• Better known as 'cashpoints' or a 'hole in the wall' and used by bank customers to withdraw money and do certain other transactions

BACS

• BACS is a scheme for the electronic processing of financial transactions
• My Payday Loan will transfer your payday loan into your bank account using BACS
• Some banks can take up to 3 working days for money to clear through this process

Bank statement

• A document sent to customers by the bank listing the transactions (money in and out) on an account – usually sent monthly

Bankruptcy

• A process of legally declaring a person cannot repay their debts, and providing protection for the debtor (the person who owes money)

Bouncing a cheque

• The process by which a bank refuses to pay a cheque because there isn't enough money in the customer's account

Budget

• A financial plan drawn up for an individual, a family, a business or a government. It is usually for a period of a month or a year, but can be for longer

Capital

• The total of a person's or a business's assets, less their liabilities

Charge card

• Similar to a credit card, but the holder has to pay off the balance in full every month

Cheque

• A written order instructing a bank to pay a specific amount to a named person. A cheque must be dated and signed

Cheque guarantee card

• A card issued by a bank, guaranteeing payment up to a set limit. If you pay by cheque, you will be asked to show this card

Cleared funds

• When you pay an amount into your bank, it may take a few days to be 'cleared'. You cannot use the money until it has gone through this process

Cost of loan

• The total cost of a loan – includes interest plus all charges, fees and so on

Credit

• Money to buy goods or services that the lender will pay back in the future

Credit card

• A card used to borrow money or to pay for purchases. The card allows the cardholder credit which they can repay monthly

Credit history

• A record of credit someone has had in the past

Credit limit

• The maximum amount allowed to be used on a credit card

Credit rating

• An assessment of someone's ability to pay debts based on their history and current assets

Creditor

• A person or business money is owed to

Credit Score

• The information on your credit report and the information you give when you fill in the application will help boost your credit score

Credit search

• A credit search is a check performed by a credit reference agency to confirm how well you manage your money
• We use this information to assess your application for a loan and confirm your identity

Current account

• A bank account which allows a customer to deposit money and withdraw money, by cash, cheque, standing order or direct debit

Debit

• Any transaction that reduces the balance in a bank account

Debt

• Money owed to another person or business

Debit card

• Card attached to your bank account, which takes payment directly from the cash in your account rather than on credit

Deferral

• Means postponing full payment of your loan for one month by paying only the charges
• This incurs another month's interest

Deposit

• To put money into a bank account – can be done by paying in cash or cheques over the counter, or by direct deposit, for example, from an employer
• A deposit can also be an amount which is laid down on an item to demonstrate the intention to fully purchase the item later – for example the deposit on a house

Faster Payments

• This means that when you have signed your payday loan agreement, your loan is deposited and that you will have the funds in your account the same day
• Please check to see if your bank accepts Faster Payments, otherwise funds may take up to 3 working days to clear
• To see if your account has faster payment go on to UK Payments Sort Code Checker

Financial planning

• The process of setting financial goals, and producing plans (for example, budgets) to achieve those goals

Gross income

• The full amount of money earned (that is, before any deductions such as tax)

Income

• Amount of money received or earned over a period of time

Income tax

• A tax on personal income. Usually deducted directly from wage

Individual voluntary arrangement (IVA)

• An alternative to bankruptcy. It is an agreement between a debtor and their creditors to pay them off over a period of time

Interest

• Money that you earn on money you keep in a bank account, or money you pay for borrowing money

Interest rate

• The amount of interest paid or charged (given as a percentage)

Liabilities

• Debts

Loan

• An agreement between a lender and a borrower. The borrower agrees to repay the money borrowed over a period of time – with or without interest

Minimum balance

• The smallest amount of money you can have in a bank account, for example

Minimum payment

• The smallest amount you can pay towards money you owe on a credit card. It is stated on your monthly statement

Mortgage

• A loan to finance buying a house, with that house given as security for the loan

Net income

• The amount of income after all deductions (for example, tax and National Insurance). Also called 'take-home pay'

Ombudsman

• An official who investigates citizens' complaints against the Government or its servants

Online banking

• A service which allows you to operate a bank account over the internet

Outstanding

• When you borrow money from a lender and have not yet made a payment, this is the outstanding balance

Overdraft

• An arrangement with a bank which allows customers to withdraw more funds from a current account than they have in the account. It is a form of lending

Payday loan

• A short-term loan which you repay on your next payday.

Personal identification number (PIN)

• Numbers which allow you to access information or money, from ATMs for example. You should never tell anyone else your PIN number

Secured loan and credit

• A loan with property or other assets as security

Sort code

• A six-digit number printed on your cheque that identifies your bank and the branch

Store card

• A store card works like a credit card, but can only be used in the store that issued it

Take-home pay

• See 'net income'

Telephone banking

• Carrying out transactions on your bank account over the phone

Term

• The period over which a loan is scheduled to be repaid or an investment runs

Unpaid balance

• The amount still owing on an account

Unsecured loan and credit

• A loan not backed up by collateral or guarantee of any sort

Utilities

• Services such as gas, electricity and phone

Withdrawal

• Taking money out of your bank account