Jargonbuster

We said on our homepage that we would be a jargon free website. Sadly, there are some words that you just cannot avoid in everyday life when dealing with your money, so we want to help you by providing a simple translation of what these words mean. 

Secured loan

This is where you borrow money on the back of some security that can be sold to repay the loan if you stop paying the agreed regular amounts. In most cases this is a property but can be taken against another valuable asset.

Unsecured loan

This is where you can borrow money without having to put your house or valuable property up as security.

Variable Rates

This means that the repayment amount can go up as well as down until you repay the loan. The variable rate will be influenced by the base rate which is set by the Bank of England and is the rate at which it will lend money to other financial institutions – remember you aren’t the only one who needs to borrow money!!

Fixed Rate

This means that the rate of interest you pay will remain the same as long as the loan is in place.

APR

Annual Percentage Rates allow us to compare the cost of different loans. This is a fair way of assessing all the hidden costs included in a loan. The lower the APR, the cheaper the loan, which is better for you.

AER – Annual Equivalent Rate

This allows you to compare the amount of interest payable from bank or building society accounts.

Inflation

This is a word to describe the increase in prices and in real terms means that your money is worth less than the year before.

Debit Card

This is like paying for an item with cash or buying items online. The agreed amount is taken from your account (subject to sufficient funds being in place) and transferred to the firm you are paying. Debit cards are the main reason as to why cheques are no longer used.

Interest

There are 2 ways of using the term interest. It can be used to describe the money you earn in a bank account or savings product as well as the money you pay if you take out a loan. Both ways are expressed in percentages.

ATM

Automated Teller Machine or cash point.

Top Tip. When you take money out of an ATM/Cash point make sure that there is no charge to do so. Don’t pay for the privilege of getting your own money. Usually these are the cash points that have no queues at them but appear at convenient places such as service stations/ garages/train stations!!

PIN

Personal Identification Number. This is usually a 4 digit number that gives you access to cash machines, online banking, telephone banking. These should be kept secret but can be changed to be more memorable. Don’t use your own birthday or sequences such as 1111.

SO/Standing Orders

This is a regular instruction to your bank to pay the same individual or company the same amount on an agreed date. For example a gym club membership.

DD/Direct Debit

This is an instruction that you give your bank to pay a regular bill without a specified amount each month. For example a mobile phone bill that depend on the amount of calls and texts used.