Jargon Buster
Account Holder
The named person on the bank account- liable for the conduct of the account
AER (Annual Equivalent Rate)
The rate of interest earned within a year, irrespective of how often interest is added to your account. The higher the AER, the better the return.
AER (Annual Equivalent Rate)
The rate of interest earned within a year, irrespective of how often interest is added to your account. The higher the AER, the better the return.
APR (Annual Percentage Rate)
The overall cost of borrowing if you owe money on your credit card, loan or overdraft.
APR (Annual Percentage Rate)
The overall cost of borrowing if you owe money on your credit card, loan or overdraft.
Arrangement fee
A fee that you pay a lender, usually to reserve the funds for a mortgage or lifetime mortgage
Arrangement fee
A fee that you pay a lender, usually to reserve the funds for a mortgage or lifetime mortgage
Arrears
An unpaid debt, for example your mortgage or other loan
Authorised overdraft
You and your bank agree an amount which is available for you to spend even if you don't have money in your account. If you do this the bank will usually charge you interest and sometimes other fees as well.
Authorised overdraft
You and your bank agree an amount which is available for you to spend even if you don’t have money in your account. If you do this the bank will usually charge you interest and sometimes other fees as well.
Bad Debt
Debt which is considered adverse to the person taking it out as it will not lead to increases in wealth in the future, and may even lead to them being worse off. This may be due to expensive interest charges, for example. Examples of bad debt include store cards or hire purchase agreements for unnecessary consumable goods.
Balance
The sum of money showing on a bank or credit card statement. A positive balance refers to the amount you have in your bank account. A negative balance refers to the amount you owe.
Balance transfer (credit cards)
Where you can transfer some of your debts from one credit card to a new one and pay the sum off, usually at a 0% interest rate for a set period of between six and 14 months. After this period ends, the balance begins to attract interest
Bank Account
The holding place of funds deposited by an individual (account holder) into a specified area (account). The account is normally subject to terms and conditions of use. Different examples of bank accounts include student accounts, high interest accounts and current accounts. Each has individual features, such as commission-free services, higher rates of return on funds deposited or easy access to funds.
Bank charge
A fee payable to banks for going overdrawn or for bouncing payments (Direct Debits, cheques or standing orders). The penalty amounts differ from bank to bank.
Bankrupt
Bankruptcy is a legal status that usually lasts for a year and is a way of clearing debts you can't pay. Bankruptcy has a number of consequences.
Borrowing
To be in receipt of funds obtained with the promise of repayment at a later date.
Budget
Quantified expression of a plan; the careful management of funds in order to achieve their maximum potential.
Budgeting
A way to work out how much money you have coming in and going out each month
Bursary
A sum of money awarded to a student which does not have to be repaid; often paid directly by the university to be used for a specific purpose-see means tested.
Cash advance
A cash loan from a credit card account, which you can get from a cash machine or a bank withdrawal.
Cleared and uncleared balances
A cleared balance shows the money that has already reached your account and is ready for you to use. An uncleared balance includes the money in transit to your account but not yet available.
Consolidation loan
Rolling all your debts into a single loan, usually with a lower monthly payment and a longer repayment period, which will cost you more in the long run
Consumer Credit Act
The Consumer Credit Act applies to most businesses that lend money to consumers or offer goods and services. The Act requires that these businesses obtain a consumer credit license from the Office of Fair Trading (OFT).
County Court Judgment
A judgment for debt, which can remain on file for six years and make it hard, or impossible, to borrow money in the future.
Credit
To purchase something 'on credit', to make a purchase on deferred payments, I.e. with the promise to pay later. Also referred to as 'Hire Purchase.' Legally, the item remains the property of the vendor until the final payment has been made, when it becomes the property of the purchaser.
Credit history
Record of an individual’s past borrowing and management of the repayments.
Credit limit
The maximum amount you may borrow on a credit or store card. This is determined by your credit score.
Credit reference agency
A firm whose business is gathering data about individuals (and businesses) that can be used by lenders to assess creditworthiness
Credit Score
The quantifiable record of how a range of contracts and accounts have been conducted in the past. The score, or rating, is compiled using a large array of data sources, including bank account conduct, mobile phone contracts, utility bills and credit cards among others. The rating is compiled by a credit rating agency external to the financial institution and is extremely influential and difficult to change. It is often a deciding factor when applying for large loans or mortgages in later life and hence, it is vitally important to build and maintain a healthy credit score early in a person’s financial lifecycle.
Credit scoring (or credit rating)
The system your card issuer uses to decide whether to provide you with a card, and to set your credit limit. Credit scoring works by awarding points to the information you provide on your application form and to the information recorded on your credit report (held by a credit reference agency).
Credit union
An organisation that lets you save and borrow money. They are owned and run by their members, for their members. Membership depends on people having a common bond.
Debit
A withdrawal of funds/ a negative entry in a bank account.
Debit card
You usually get one when you open a bank account. When you pay by debit card, the money is automatically taken from your account
Direct Debit
An instruction you give to your bank or building society to make regular payments to someone from your account. The person or firm you are paying can vary this amount, although they must notify you normally ten days in advance of your account being debited (usually in the form of a bill).
Good debt
Debt which is undertaken which will lead to a speculated future gain in wealth. For example, a student loan is considered good debt as it will hopefully lead to higher future earnings. A mortgage is also considered good debt, as a house is considered a good investment, the value of which is likely to rise over time.
Grant
A sum of money awarded by an institution or education board, often means tested, which does not have to be repaid. Normally awarded for more general purposes than a bursary.
Hardship Fund
A discretionary fund provided by some universities and colleges to assist students in financial difficulties who are exempt from applying to the Support Fund
Hire purchase
A loan to buy goods. You pay it back with interest over an agreed time. You do not legally own the goods until you've paid back all the money you owe
Interest
The cost of borrowed funds/the reward for lending funds. It is the amount that will be charged for taking a loan out, or the amount earned by placing funds in a savings or other bank account.
Interest Rate
The exact level at which borrowed funds are charged/deposited funds earn. It fluctuates on a regular basis and is normally set in line with the Bank of England's base rate, which is set monthly.
Interest-free period
The period between the date you buy something on a credit or store card and the date when you must pay your bill. This can be 50 days or more. So if you settle your bill in full every period, you won’t be charged interest
Keyfacts Documents
Important information for you, set out in a standard way, so you can compare service, product and costs. Make sure you get them and read them
Loan
A bank loan is a set amount of money which the bank has agreed to lend you for a set period of time. Payments and interest rates are agreed at the time of the loan.
Means-Tested
The awarding of funds (loan/grant/bursary), the amount of which depends on environmental factors including parental income, place of residence, year and course of study and the age of any dependants.
Minimum payment
The amount you must pay each month on your credit or store card account to keep to the terms of the agreement
Outstanding balance
Any money you owe on a credit or store card.
Overdraft- Arranged
A temporary facility which allows the holder of a bank account to withdraw funds not currently sitting in their account to overcome a temporary cash flow problem. This is normally only up to a specified limit and is repayable on demand. Often, arranged overdrafts carry low interest rates and do not incur unauthorised fees, providing the overdraft limit is not breached.
Overdraft/overdrawn
A facility allowing you to spend more money from your bank account than you have in it. The bank will usually charge you interest and sometimes other fees as well if you do this. There are two types of overdraft: authorised (which is agreed in advance between you and your bank) and unauthorised (where you go overdrawn without your bank’s prior approval). Going overdrawn without permission regularly could affect your credit rating.
Payment protection insurance (PPI)
An insurance policy to help you keep up your loan repayments, for example on a loan or credit card, in the event you can't work because of redundancy, accident or illness.
Priority debts
Debts that should be paid first, to stop you potentially losing your home or getting a criminal record. These include rent, mortgage and any secured loans; gas, electricity and water bills; child maintenance; and council tax
Standing Order
The instruction to a bank by the account holder to withdraw and send a specified amount to a specific location on a certain date. A one-off transaction which requires the permission of the account holder.
Store Card
A form of credit card branded by an individual company, normally advertising benefits specific to that store or company only to the store card holders. A very expensive form of finance normally targeted at specific age groups and genders.
Student Loan
Borrowed funds made available specifically for students, with separate loans to cover tuition fees and maintenance costs. Student loans are awarded by local education boards and are attractive to many students due to the lower-than-average interest accrued on such accounts and the flexibility granted on the repayment of borrowed funds.
Support Fund
The Support Fund is used to provide discretionary financial help for students who get into financial difficulty during their course.
Unauthorised
The withdrawal of funds, not currently available to the account holder, without the bank's prior permission. A very expensive form of finance, which normally incurs penalty fines and high interest rates.
Unauthorised overdraft
Spending more money than you have in your account without the bank's permission. If you don't have enough money in your account, the bank can refuse to pay cheques, direct debits and other payments you want to make. This could also result in expensive charges
Contract
A legally binding agreement, either written or unwritten between two or more parties.
Deposit
A down payment usually required as part of a contract in order to secure accommodation. It is used towards repair and cleaning costs both during the year and at the year end. The amount of the deposit is at the landlord's discretion, but is normally set at one months rent or more.
Direct Debit
A method of payment favoured by many landlords and agents due to its convenience and automatic nature. An amount is contracted to be paid from one bank account into another on a continued set date for a specific purpose, for example rent payments. Both parties must agree to this form of payment before a mandate for the direct debit can be put in place.
Disputes
A disagreement between parties of the contract, often in relation to the terms of the contract. They may arise regarding the repayment of a deposit on the termination of the contract, for example.
Estate Agent
A person or company, often working on behalf of a private landlord to organise and oversee the letting of accommodation to tenants. They are the first port of call if any problems should arise and are often the intermediary for giving and receiving payments.
Guarantor
A secondary character reference requested by landlords or estate agents to ensure that payment will be received in the event of any circumstances preventing the tenant from making a payment. They are often professional people who act as a witness on the original contract.
Halls of Residence
Accommodation provided directly by the university, specifically for it's own students. The accommodation is often on or very close to campus and offers a wide variety of amenities, including shared living spaces, internet access and in certain rooms an en suite.
Lease Period
The period of time for which the owner has passed possession of the property to the tenant for. The lease period must be clearly stated in the original tenancy agreement.
Leaseholder
The person, or people with the right to use the property with permission from the owner in the form of the lease agreement. In return, the leaseholder must meet certain contractual conditions, which may include the timely payment of rent and the upkeep of the property to the standard at which it was left to the tenant.
Rates
Payments exclusive to Northern Ireland households which cover some public expenditure, including refuse collection and water charges. In the UK these are collected differently, and full-time students studying in Northern Ireland can apply for their student accommodation to be exempt from requiring rates payment.
Shared Accommodation
A dwelling occupied by two or more people. The living space and kitchen is often shared, with private bedrooms often available.
Tenancy Agreement
The contract between the tenant and the property holder which stipulates the amount of rent to be paid, the tenancy period and any other conditions agreed between the two parties. A legally binding document.
Tenant
A person who has signed a rental agreement and therefore agreed to the terms of the lease laid out by the property owner.
Witness
A third party who is willing to act as counter-signatory on a contract. This is like a character reference, often made by a professional person such as a solicitor, confirming that they believe the prospective tenant will stick to the terms of the contract.
