Jargon Busting Glossary

*We are currently working hard to make sure we define all the jargon succinctly so please be patient whilst we complete this page. Ta! *

Here at Clever Student Money we keep our promises.  We promised to never use jargon-y words without explaining them and this page is us fulfilling that promise!

If there is a word you spot in our blog that isn’t explained here then please do let us know, we’ll put ourselves on the naughty step.

AER – Annual Equivalent Rate. What the interest rate would be if interest was paid and compounded each year.

APR – Annual Percentage Rate. Put simply this is how much a loan or mortgage will cost you over a year. Taking into account any arrangement fees, annual charges or standard costs associated with the loan to give you one neat clean percentage. It is a legal requirement for banks to advertise a ‘typical’ APR – that might not be what is offered to every applicant.

Arrears – Falling behind in payments or failing to pay enough back on a loan or credit card. Getting into arrears can reduce a credit score.

BACS – Bank Automated Clearing System. A system used by banks to transfer money from one account to another in a different bank. Commonly used with direct debits and salary payments.

Balance transfer (credit cards) – A credit card onto which you can transfer other debt and then pay off the balance usually for a 6-14 month 0% interest period. After which, the balance begins to attract interest.

Base rate – Now officially called the Bank Rate. This is the main interest rate, set by the Bank of England, upon which other interest rates are based.

Bond deposit – Paid into an official Protected Deposit Scheme usually managed by your letting agency or directly through your Landlord. A lump sum, usually a months worth of rent, that is held in a deposit scheme until you leave the property.

Budget -An allocated amount of money, based on income or savings of an individual. To be spent over a certain set period of time.

Cheque – A way of paying money to an individual or (decreasingly so) businesses. Written by the account holder from a personal Cheque book.

Credit Card – A card issued by either a bank, financial institution or sometimes retailers, that allows purchases on the basis of credit. The amount of credit allowed varies according to credit ratings and interest is charged on the balance of the card.

Compound interest – interest that is paid on the original balance and also the interest it has already earnt. So if you had £100 in an account that paid 2% interest; after year 1 you would have £102, after year 2 you would have £104.04.

Contents insurance – An insurance policy that covers your personal possessions, electrical equipment, furniture and valuables.

Council Tax – A tax paid to your local authority, amount is based on the size and location of the property. Students don’t have to pay this tax (hooray!).

Credit report– A report giving a detailed credit report for an individual. Including debts, late payments and arrears notices.

Credit Score – Usually based on a credit report. The higher the score, the less risk the individual represents.

Debit Card – A plastic card which is used to pay for transactions. The money then comes directly out of your current account.

Deflation – The opposite of inflation and usually occurs in a recession. It is measured by the Consumer Price Index. It usually manifests as a reduction in the prices of goods and a decrease in the value of wages paid.

EAR – Equivalent Annual Rate – see AER

Exchange rate – An exchange rate that represents how much one currency is worth in terms of another.

Financial Services Authority – the main City regulation body whose responsibility it is to protect iinvestor’s interests.

Gross return – In the terms of an investment, the gross return is the profit before Tax is taken off.

Guarantor – Someone (like a parent) who guarantees a payment such as rent. This results in them taking financial responsibility for the debt if the person gets into arrears.

ISA (Individual Savings Account) – A tax free savings account that allows you to save in cash and/or shares up to an annual limit.

IVA (Individual Voluntary Agreement) – An legally binding repayment schedule that is made between a creditor and a debtor. Usually seen as a better arrangement than declaring bankruptcy.

Letting Agency – An agency similar to an estate agent, who deal purely in Lettings. Both managed and un-managed properties can be let through an agent.

Mortgage – An agreement establishing property as the security for a loan (usually arranged to pay for said property).

Recession – Technically a recession is when a country’s economy shrinks for two consecutive quarters, as measured by GDP.

Student’s Union – An organisation existing at most UK Universities and Colleges, run by students and dealing with matters of interest to the student population of that institution. Often running partly as a charity and partly as a business, depending on the size of the Union and the premises it may run.

Tax Code – Dictated by the Inland Revenue. A tax code is a mixture of letters and numbers that represents your status and your tax allowance. Usually, adding a zero onto the end of the first three numbers of the code, gives you your tax-free allowance.

VAT (Value Added Tax) – There are three different rates of VAT, the standard rate (17.5%), reduced rate (5%) and zero rate. Vat is applied to different goods and services at the above rates.