A B C D
E F G H
I J K L M
N O P Q R
S T U V
W X Y Z
Some contents insurance polices will
allow you to claim for accidental damage.
It is the damage done to your possessions
by accident, for example, you spill
a pot of paint over your carpet.
Where you live. This includes living
with your parents, in a hostel, renting
somewhere or buying on a mortgage.
This is the service provided by a bank
or building society that holds money
for you. A current account is an everyday
account for money to be paid in or
taken out – it helps you budget
and manage your money and pay for things
in a convenient and secure way. A deposit
account is for savings.
If you believe an estimate on your
electricity or gas bill is wrong, you
can ask the electric company to send
someone around to read the meter. They
can even show you how to read the meter
yourself, so you can phone up and give
them an accurate reading in the future.
Stands for Annual Equivalent Rate.
This shows what the interest rate would
be if the interest on savings were
paid and added to savings at the end
of each year. Actually interest is
often paid more often, such as four
times a year. The AER is worked out
in a standard way so you can compare
interest rates directly with each other.
The higher the AER, the better the
return is on your savings.
Means what you are left with after
tax has been paid. You must pay tax
on most types of income (such as interest
from savings, earnings from your job
and pensions), but everyone can have
some income tax-free. In 2002 - 3,
the tax-free allowance for people under
age 65 is £4 615. Older people
may get a higher allowance.
This means that your possessions are
covered by the contents insurance policy
even though you have taken them outside
It means ‘ante meridiem´ which
is Latin for ´before noon
An applicant is a person who is applying
Is the Annual Percentage Rate. This
tells you the cost of a loan, taking
into account the interest you pay,
any other charges and when the payments
fall due. The cost is standardised
as an annual percentage rate so you
can easily compare the cost of one
loan with another e.g. a loan with
an APR of 15% is more expensive than
one with an APR of 11%.
ATM stands for Automated Teller Machine.
These are also known as ‘cash
machines’. You can find them
in many places including banks, shopping
centres and railway stations. In order
to be able to use an ATM you need a
cash withdrawal card and a personal
identification number (PIN).
This is the amount of money the store
card or Credit Card Company will lend
you now. That is, your credit limit,
take away the amount you have already
borrowed. You can use this money to
buy goods or as a loan.
Your balance is the amount
of money you have in your account at
any particular time or which you owe
on your credit or store card. It will
be shown on your statement.
The balance that was shown on your
A commercial organisation that undertakes
to provide a range of financial services,
such as current and deposit accounts.
Banks must be authorised to take your
You can borrow money from your bank
for a pre-arranged interest rate.
BASIC BANK ACCOUNT
A service from a bank or building society
which lets you pay in money, get cash
out and pay bills. It doesn’t
let you spend more than you have in
your account, so there is no risk of
going overdrawn and running up overdraft
All children born in the UK are registered
on the Government’s National
Register of Births and Deaths, and
issued an official birth certificate.
It’s an important record of your
identity. If your birth certificate
is lost or stolen, report it to the
police, and go to your nearest Register
Office to apply for a new one.
If you are asked to write in block
capitals it means you must write each
letter of every word as a simple, clear
capital LIKE THIS.
A cheque that the bank refuses payment
on because there is not enough money
in the account of the person who wrote
the cheque. The bank usually sends
the cheque back to the person it was
written out to (the payee). The cheque
is marked ‘return to drawer’.
When this happens you have to ask the
person who wrote the cheque to give
you cash instead or to put some money
in their account.
Getting money from someone else that
you intend to pay back. You might borrow
informally from friends and family
or take out a formal loan with a written
A plan of your spending.
This type of insurance pays out if
the structure of your home is damaged.
For example, it may cover you if tiles
fall off your roof during a storm,
or if your house is damaged by fire.
organisation that is owned by its members,
who are some or all of the customers
saving with or borrowing from the society.
They often offer a range of financial
services and are similar to banks.
Building societies must be authorised
to take your money.
The months on the calendar
e.g. January, February etc. The calendar
months are generally longer than 4
The amount of money you originally
have, save or invest, before any interest,
other return or loss is taken into
account. It could also be an amount
of money that you have borrowed.
Cash is the simplest way of buying
something. It is not a good idea to
send cash payments through the post,
but you can pay bills such as gas and
electricity in cash by using the Giro
payment system available through post
offices and banks.
Cashcards, or cashpoint cards, are
the simplest type of account cards.
They can usually only be used at cash
machines (with a personal identification
number, or PIN) to withdraw cash, check
your balance or print out a mini- statement.
A record of all the money coming into
the business less all the payments
as they are made, measured over a particular
The receipts of your business. If your
receipts are bigger than your payments,
you have a net cash inflow.
Payments out of your business. If your
receipts are less than your payments,
you have a net cash outflow.
Goods are shown in the pages of the
catalogue. You can buy them on credit
and pay in weekly or monthly installments.
The goods will usually be delivered
by post. The price of the goods in
the catalogue may be more than the
price in a shop.
Fees and interest which you have to
pay, for example, when you borrow money
or buy on credit.
A written instruction to a bank. It
can be used to pay you money. You can
write out cheques to yourself to get
money out of your account or to pay
other people, if you have your own
chequebook with your current account.
A plastic card that is issued by a
bank or building society and guarantees
that the amount of money on any cheque
you write will be paid whether or not
there is enough money in the account.
There is a limit to the amount that
is guaranteed - £100 or £250
are common amounts.
Citizens Advice Bureau (CAB)
A local office where you can get help
with a range of problems including
your finances or debts. To find your
local CAB look in Yellow Pages or ask
at the Library.
Clearing is the time it takes for the
bank to transfer money from one account
to another. This is why you usually
have to wait a few days before you
can take out the money from your account
from a cheque you have paid in.
Interest rates are usually compounded
- so the amount paid on savings is
based on the capital plus the interest
paid so far (provided you have not
taken anything out of the account).
This also works for loans - so the
amount you owe can increase dramatically
over quite a small time.
Comprehensive insurance is more expensive
than a third party only policy because
it provides cover for accidental damage
to your own car in addition to the
third party cover.
When you buy something you are a consumer.
You buy contents insurance to cover
your possessions. Some policies will
pay for damaged items to be replaced
as new – although the insurer
may send you a voucher for a set
value for you to replace the item
with one of your own choice at a
certain store rather than give you
the money. The amount you pay will
depend on where you live, how big
your house is and whether you have
a lot of valuables.
Tax paid to the local council for local
services. For example, libraries, police,
local roads etc.
COST OF CALLS
Most telephone bills contain a breakdown
of the cost of calls. This may include
a list of the more expensive calls – international
calls and calls to mobiles, for instance
- as well as the date and time they
were made. Read the breakdown on your
bill carefully. It can help you work
out: if a bill is correct; how you
may be able to save money by phoning
at off-peak times; and even if another
service package may be more suitable
An account that is ‘in credit’ means
that there is some money in it that
is available to be spent. If you obtain
goods or services ‘on credit’ it
means that someone (for example, a
bank or credit institution) has given
you the money to make the purchase
- they have credited you with the money.
You must pay the money back. If you
do not pay your credit card on time
or have a history of not paying back
other loans, this will be shown on
your file held by a credit reference
agency. When shops or banks check your
creditworthiness and see this information
has been listed, you may find it very
difficult to get a loan.
Credit cards are available from most
banks, and allow you to borrow money
up to a certain limit. When you buy
something with your credit card, the
amount you spend is added to your total
borrowing. Every month you are sent
a statement to show how much you have
borrowed and how much you need to repay.
If you don’t repay the full amount,
you will start paying interest. You
can also get money from cash machines
with most credit cards, but this is
also borrowed money, and will be added
to your monthly bill. This can be very
expensive as you start paying interest
If you’ve had trouble paying
loans before, or you have any court
judgments against your name, you may
find it difficult to take out a loan.
Your name may be on a list of people
with poor credit histories. You may
find that the only lenders that will
offer you a loan charge very high interest
The maximum amount the store card or
Credit Company will lend you altogether
at any time.
An agency that holds information on
adults. This information includes public
records (e.g. Electoral Roll entries),
credit account information (e.g. repayment
records for loans, credit, mortgage,
hire purchase) and records of credit
checks that have previously been made.
Your details held by a credit reference
agency. It will include whether you
appear on the Electoral Roll, your
name and address from the Electoral
Roll, how you have handled previous
credit, and any other credit checks
made about you.
The chance that you might not repay
your loan or credit.
A score given by a shop or credit agency
based on your personal and financial
circumstances. It helps them to decide
whether you are likely to repay the
loan you are asking for.
A non-profit making co-operative savings
association that makes loans to its
members at low interest and encourages
A creditor is someone to whom a debt
is due. This word is often used to
describe the person that lends you
A bank or building society account
which helps you to manage your money,
pay bills, receive money and keep money
secure. It will have more services
than a basic bank account, for example,
you will get a cheque book.
DATE OF BIRTH
Your date of birth is the day, month
and year you were born. If you are asked
to present your date of birth in numbers,
always begin with the day, then state
the month, then the year. For instance
if your date of birth is 5 February 1972,
Money which is taken out of an account
is ‘debited from’ that account.
Debit cards can be used to pay for
many things without using cash or
a cheque. Some are multifunction
cards which can also be used in cash
machines to take money out of your
bank account, and to guarantee cheques.
(If you use your card to guarantee
a cheque, the person you pay your
cheque to knows it will be honoured
by the bank.) When you make a payment
or withdraw cash with your debit card,
the money is taken straight out of your
account electronically. You cannot borrow
money on a debit card. Useful when paying
in shops, shopping by phone or on the
If you are in debt you owe money to
someone e.g. a bank.
A person who owes money.
DELETE AS APPLICABLE
To delete is to remove something. On
a form, to delete something would mean
to put a line through it. Delete as applicable
means ‘cross out the things that
do not apply to you’.
People who are financially dependent
on you for their livelihood. This is
usually children who live with you,
but it could be elderly relatives
or someone you care for.
An amount of money paid by you to make
sure you get the goods. You may need
to pay a deposit when getting goods
Failed to make payments; or failed
to pay off the debt.
An arrangement where you instruct the
bank to release money from your account
to pay bills and other amounts automatically.
The billing company requests the money
from the bank directly. You are told
in advance in writing how much will
be taken and the date it will be taken
out of your account.
This means reading carefully to aid
understanding. When you are reading
for information, you should usually
scan the text first. Some texts, such
as instructions, need to be read in
Money which is taken off the price
of something. You may need to collect
coupons or vouchers before claiming
the discount. Sometimes shops give
a discount to their employees.
No longer used.
Full driving licences are issued by
the Government when you pass your driving
test. Previously, driving licences
did not contain a photo, but all new
licences are now issued with a photo,
to help prevent crime. If you have
an old-style licence you can apply
to the DVLA to get one in the new format.
If your driving licence is lost or
stolen, you should report it to the
A list of names and addresses
of people over 18 in the UK. You are
required by law to register to be on
the Electoral Roll. You can then vote
in elections. The Electoral Roll is
checked when you make an application
Someone who is paid to work for someone
else. The person who you work for is
Stands for employee National Insurance
Contributions. This is a form of additional
taxation and will be taken off your
pay before you get it. You usually
need to make contributions before you
can claim certain state benefits, such
as State Pension when you retire.
An estimate is an educated guess. An
electricity or gas company will work
out an estimate on the basis of how
much electricity or gas you have used
at this time of year in the past. Look
at the ‘meter readings present’ column
on one of your bills. It may have an ‘E’ before
the number. This means the figure on
this bill is an estimate. There will
usually also be some information on
the bill telling you whether your bill
has been estimated.
Almost all insurance policies have
exclusions. These describe events that
are not covered by the policy.
Your expenditure is the money you spend.
It includes things like:
• council tax
• water, gas and electricity
• child care
• TV licence
• mobile phone
• catalogue repayments
• clothes and shoes
• household items
• loan/credit card repayments
• car tax
• car insurance
• household insurance
• other expenses
On plastic cards - after this date
your card cannot be used.
A sum of money you pay, for example,
to have a loan or credit arranged for
A company which makes money by lending
to people who want to buy goods on
credit. Most shops use finance companies
for their credit deals.
To do with money.
An individual or firm that can assess
your financial needs, recommend suitable
products, and arrange for you to buy
or invest in these products. Some advisers
can also manage investments for you.
Where advice concerns ´packaged
products´ (such as unit trusts,
open-ended investment companies, investment
trust savings schemes, investment-type
life insurance and pensions), an adviser
must normally be either:
to a single product provider, or
and able to recommend any product
on the market.
An adviser must be authorised by
the Financial Services Authority
These will include statements, bills,
Your financial situation refers to
how much money you receive in wages
and/or benefits and how much money
you have saved up. It also includes
how much money you owe and any financial
arrangements you have made for the
future, such as a pension. Sometimes
people will also ask you about your
regular outgoings, such as the amount
you pay in rent.
FIRST £50 OF DAMAGE (ALSO CALLED
Some contents insurance policies ask
you to pay the first £50 (or
other amount) of the cost of the damage.
The insurer will then pay for anything
more than this.
Interest rates can go up and down.
A fixed interest rate account means
that you are guaranteed that the interest
you get will stay the same.
Your forename is your first name. For
instance, Nigel Parker’s forename
FREE BUFFER ZONE
Some bank or building society accounts
have a buffer zone (a free temporary
overdraft) so you can take this money
out. You will not be charged for being
very slightly overdrawn on this basis.
FREE FROM INCOME
AND CAPITAL GAINS TAX
Saving in these accounts means that
you will not pay tax on the interest
your money earns.
Full name refers to your first name,
any middle name or names and your surname.
For instance, Nigel Matthew Parker
Indicates an amount from which
certain items have yet to be deducted.
Interest on savings before any tax
is taken off.
In a business - the money you make
from selling your goods and services
less the cost of materials or making
Your pay before anything is taken away
from it, like income tax and National
There are many types of health
insurance – some
give you a lump sum if you become ill,
others pay you a regular income while
you can’t work. Some health insurance
pays for your treatment at a private
hospital – and lets you jump
the waiting list.
You take away the goods and can use
them. You have to make regular payments
and after a set length of time, when
the goods have been paid for, the goods
will become yours. Cars are often bought
this way. You would not own the car
until you have completed the hire purchase
agreement - so you would not be able
to sell the car until you had paid
HONOUR A CHEQUE
A bank honours a cheque by paying out
the money as you have requested. A
cheque will only be honoured when it
has been guaranteed or there is enough
money in the account, or you have an
A bank honours a cheque by paying out
the money as you have requested. A
cheque will only be honoured when it
has been guaranteed or there is enough
money in the account, or you have an
HOW MUCH YOU
Some lenders alter the interest rate
according to how much you borrow.
Your identity is who you are. You may
be asked to show documents that prove
that you are who you say you are. There
are lots of different documents that
can be used as proof of your identity,
for instance your birth or adoption
certificate, a valid passport or a
marriage certificate. Any papers that
show your address, date of birth or
photo may be useful. The official you
are talking to can give you a full
list of documents that you can use.
Your income is the money you have coming
in. It includes things like wages,
benefits (like income support or child
benefit) and child maintenance payments.
‘In credit’ means that
there is money available to spend in
Index-linking means that the value
of the financial product or service
(e.g. pension, savings certificate)
is increased in line with an index
(e.g. the Retail Price Index, or inflation).
With some types of contents insurance
the insurer works out how much you
need to increase your cover by each
Weekly or monthly repayments made to
pay off goods bought on credit or to
pay off a loan taken out to buy them.
Means you can get your money back immediately
without having to wait for any notice
Insurance cover describes the situations
you are insured against. For example,
if you have a car you might have comprehensive
cover or only be covered for third
party, fire and theft.
This is the money you pay to the insurance
company to make sure you are covered.
Some premiums are paid monthly; others
are paid quarterly or annually.
The reward you get for lending your
money to say, a bank or a building
society. Also the cost you pay when
you borrow money through a loan or
credit agreement. It is usually worked
out as a percentage of the money you
have borrowed. For instance, if an
interest rate is 10 per cent and you
borrowed £100, the interest you
have to pay will be 10 per cent of £100,
This is the percentage that is paid
on savings or loans. For example, a
savings account offering an interest
rate of 10% would give you a better
return than one offering 5%. Similarly
a loan with an interest rate of 20%
will cost more than one with a rate
ISA means Individual Savings Account.
You do not have to pay tax on the gains
or income from an ISA. You may not
have a mini-ISA and a maxi-ISA in the
same tax year. You can pay an overall
total of £7,000 into ISAs each
tax year. You can choose to put your
money in up to three mini-ISAs or into
one maxi-ISA each year. These limits
may change. A maxi-ISA is an account
(or ´wrapper´) in which
you can hold a wide range of savings
and investments products. These must
include stocks and shares and may also
include savings accounts and life insurance.
You can put up to £3,000 into
the cash component of your maxi-ISA,
up to £7,000 into the stocks
and shares component of your maxi-ISA
and £1,000 into the life insurance
component of your maxi-ISA. However,
you must not exceed the overall total
of £7,000 paid in any one tax
year. With a mini-ISA you can hold
cash, or stocks and shares, or life
insurance. You can have up to 3 mini-ISAs
in any one tax year made up of three
different types of holding. The maximum
you can pay into a cash ISA is £3,000,
in a stocks and shares ISA is £3,000
and in a life insurance ISA is £1,000.
A mini-cash ISA is a savings account
that pays tax-free interest. You can
save up to £3,000 in a mini-cash
ISA in any one tax year.
This is a bank account owned by two or
more people. For example, you could have a joint account with
Your legal status can refer
to whether you are married, single,
divorced, widowed or separated. Sometimes
it can refer to whether you are a citizen
of the UK and whether you have a right
to work in this country.
This type of insurance pays out a lump
sum to your family if you die. It is
necessary, for example, if you are
paying an interest-only mortgage. With
a life insurance plan, the insurer
will pay off the mortgage with a lump
sum if you die before you’ve
paid it off. You can insure for more
than the cost of the mortgage to make
sure that your family has some money
to live on as well.
A sum of money which you borrow, usually
Someone who lends money and charges
a very high rate of interest. They
will not hold a consumer credit licence.
Loyalty cards are offered by some shops
and supermarkets to encourage people
to shop there. You cannot usually use
your loyalty card to pay for anything,
but every time you spend money at that
shop you will be given ´points´ on
your card. When you have saved enough
points, you may be able to use them
to get vouchers to help pay for your
shopping, or perhaps other things such
A lump sum is a one-off payment. Some
people have insurance policies that
pay a lump sum if they have an accident
or are ill. Other people prefer to
have a policy that provides an income
over a long period of time.
Most cash machines check your bank
account before giving you any money
and will not give you any more than
there is in your account. There is
often a limit of, say, £250 per
day on your withdrawals.
MINI-ISA OR CASH
ISA means Individual Savings Account.
A savings account that pays tax free
interest. You may not have a mini-ISA
and a maxi-ISA in the same tax year.
You can save up to £3000 in a
mini-cash ISA in any one tax year.
This limit may change.
On credit or store card statements
- the minimum amount you must pay each
month off your debt.
Money is an exchange. It is accepted
as a payment for goods or services.
A loan usually taken out to buy property
e.g. a house. If you do not keep up
the mortgage repayments the mortgage
company can repossess your house. This
is an example of a secured loan. The
loan is secure for the mortgage company
because they can not lose out. They
get the value of your house if you
default on the loan.
There are two types of motor insurance.
Third party insurance is the minimum
insurance cover required if you drive
a car on public roads. You may prefer
to also take out a comprehensive policy
for your car.
This is the code on the plastic card
you’re given just before your
16th birthday. Your employer gives
the number to the National Insurance
Contributions Agency of the Government,
so that it can deduct money from your
wages to pay for benefits that you
might need to claim, like Incapacity
Benefit, and your state pension when
you retire. If you don’t have
one, you can go to your nearest Social
Security office to apply.
Indicates a sum of money from which
certain amounts have already been taken
Your net income is the total you earn
in a week, month or year after any
deductions for tax and National Insurance.
This is interest which has already
had the tax taken off it.
The pay you actually get. All the deductions
have been taken off before you get
In a business - the gross profit less
the overheads of the business measured
over a particular time.
The New Deal for Lone Parents is a
special scheme that helps single parents
get back to work if they wish to. If
you want to get a qualification to
help you find work, the New Deal may
offer you help with childcare costs
while you are studying. You can find
out more about the New Deal for Lone
Parents from your local Job Centre.
Less important debts. The people you
owe the money to can take you to court
to recover the debts but cannot take
any other action (such as cutting off
a service or repossessing your home).
They are likely to accept reasonable
The time you must wait to get your
money after telling, say, your bank
or building society that you want to
take it out. If you don’t wait
this time you may be penalized by,
for example, losing interest.
Your job, work or profession e.g. bricklayer,
checkout operator, teacher.
A pension from a scheme set up by an
employer, for example, a Local Council
Pension or a Teacher’s Pension.
Employees have to join the scheme to
be eligible and may have to make contributions
towards the pension. The scheme may
pay a fraction of the final salary
as a pension (calculated taking into
account the number of years worked)
or build up a cash fund used to buy
an annuity. An annuity is a special
type of investment which can pay out
a regular sum over the lifetime of
OFFICE USE ONLY
Office use only refers to information
on a form that need not concern an
applicant, or information to be added
by someone other than an applicant.
If you spend more money than you have
in your current account you will go
overdrawn. You can ask the bank if
they can arrange to lend you some money
for a short time. This is known as
an arranged overdraft. You pay an agreed
rate of interest on the overdraft.
If you go overdrawn without asking
the bank in advance, they might refuse
to pay your cheques and charge you
a high interest rate on the money that
you owe them.
The costs of running a business. It
includes things like rent, office help,
heat & light, advertising and distributing
your goods and services.
This is the document that your employer
has to give the tax office so that
the right amount of tax can be deducted
from your earnings. All employers are
required by law to give you a P45 when
you leave a job.
Putting money into your account. This
could be cash or cheques.
A paying-in slip is a form that needs
to be completed when you pay money
into your account. You can use it
to pay in cash, cheques, or both at
the same time. Your bank or building
society gives you a book of paying-in
slips when you open the account, and
there are usually some at the back
of your chequebook as well.
Money you pay out, for example, on
materials you need for your business,
interest on loans, money for services
such as gas & electricity.
A sum of money paid into your account
to pay off credit, a loan or for services
such as gas and electricity. This will
be shown on your statement.
The year is divided into equal pay
periods starting from early April (which
is also start of the tax year). If
you are paid monthly, there are 12
pay periods; if weekly, 52.
A passport is a legal document that
you must show when you travel to other
countries. Passports are a good form
of identification, because they are
an official Government record of your
identity, and they contain your photo.
Your passport will only be accepted
as a form of ID if it is valid – that
is, as long as it is current (passports
have to be renewed every ten years)
and the details are all correct. You
can apply for a passport by getting
an application form from your local
Post Office – new passports cost
about £30 for adults. If your
passport is lost or stolen, report
it to the police. The application form
for a passport is complicated to fill
in so you may want to pay a little
bit extra and go to your local Post
Office who will check you have filled
it in correctly.
The person the money is being paid
to when you write out a cheque.
An income paid out after someone retires.
The government gives tax relief on
money paid into a scheme designed to
provide a pension. A pension is a ‘locked
box’ form of savings because
you cannot spend any money in the fund
until you have reached the minimum
age (often 50). You can often take
part of the proceeds as a cash lump
sum but the rest must be taken as income.
There are different types of pension
schemes: occupational; Stakeholder;
Payments into a pension scheme will
be taken automatically from your pay,
if you pay into a pension scheme which
is arranged by your employer. This
will show up on your pay slip as ´pension
A pension plan, not tied to a particular
employment, that you can keep going
even if you change job. You might have
set up the plan yourself direct with
a pension provider or it could have
been arranged through your workplace.
Some personal pensions are Stakeholder
Many different companies offer personal
loans. These are usually loans that
you can use to pay for whatever you
want. But as with all loans, make sure
you check the interest rate and conditions
Vets’ bills can be very expensive – so
some people like to take out insurance
against their pet falling ill. Premiums
start at just a few pounds each month – but
get more expensive as your pet gets
older, just as with humans.
Most phone companies offer different
service packages to suit different
customers’ needs. These may offer
different rates for national and international
calls, for instance. Most have trade
names like BT Together.
PIN stands for Personal Identification
Number – a four-digit number
for you to memorise and keep secret,
which you use with a cash machine card.
The PIN is for security. It’s
like an electronic signature – it
identifies you and stops anyone else
using your account. Never keep your
PIN with your card (it’s best
not to keep it written down at all),
and never tell it to anyone else – not
even bank staff.
It means ´post meridiem´ which
is Latin for ´after noon´.
Policy is another word for plan or
cover. When you take out an insurance
policy, you receive a contract from
the insurance company telling you the
kind of events you’re covering
yourself for, and how much money the
company is prepared to pay out.
The amount you have to pay to buy the
insurance. You may be able to pay in
These are debts which are more important
than others because the law lets the
people (you owe the money to) take
serious action against you. Priority
debts include things like a mortgage
because your home could be repossessed
if you do not keep up your mortgage
repayments and fuel bills because your
gas or electricity could be cut off.
PROFIT AND LOSS
In a business, you make a profit if
you sell goods or services for more
than your costs. You make a loss if
the proceeds are less than your costs.
Statements are written records of how
much money you have in your account.
The bank sends them to you automatically.
A quarterly statement comes every 3 months.
Money coming in, for example, from selling
goods and services or taking out a loan.
The sums of money you pay back weekly
or monthly on your loan or credit.
The amount you get back on your capital.
A general rule is that the higher the
return the more risky the investment.
What you should do e.g. finish paying
for goods taken out on credit.
The protection that is given to you
by law. For example, you have a right
to compensation if your bank goes bust
and you lose money.
Another name for chance or uncertainty.
Types of risk include capital risk
(your savings or investment fall in
value), interest rate risk (the interest
rate you agree to may not be good value
in the future) and inflation risk (price
levels will rise so the buying power
of your savings or investments will
fall). Shares and share-based investments,
such as unit trusts, are considered
higher risk because the value of your
investment can fall (capital risk)
but growth of these investments tends
to outstrip inflation and over the
medium- to long-term usually beats
the return from savings accounts.
Any money you put aside for future
use. This may be in a deposit account – or
under your bed. ‘Rainy day’ savings
are useful for emergencies and need
to be easily accessible, while longer-term
savings can be built up to give a ‘nest
Savings are often kept in bank, building
society or National Savings accounts.
The amount you put in does not fall
in value but may grow as interest is
A scheme which is being piloted by
the government. It encourages people
who would not normally save to put
something by because their savings
are matched by money from the government.
There are strict rules about who can
benefit from the scheme and how much
money they can save.
Scanning is used to locate specific
information. It involves running your
eye over the text to look for keywords.
A secured loan means that the loan
amount is being borrowed against the
cost of something you own. This way
the lender can be sure that if you
can’t make the repayments they’ll
get their money back. For example,
some homeowners borrow money against
their houses. This means that if they
can’t make the payments their
house may be reprocessed by the lender.
An investment which makes you part-owner
of a company, along with all the other
shareholders. Some shares pay you an
income (called dividends) regularly.
With all shares, you accept a capital
risk. This means, if the share price
rises, you will make a profit when
you sell, but if the share price falls,
you will instead make a loss.
Usually means a period of time no longer
than, say, five years - and often a
A signatory is a person who signs a
document. For instance, if you are
making an application and sign a form,
you are the signatory.
Skimming is reading quickly to find
out what the text is about. Skimming
can also take in features such as headings,
subheadings and illustrations to obtain
an overview of the subject matter.
Types of debit card where your account
is always checked to see whether there
is enough money to pay for the goods.
Your account cannot go overdrawn if
you use these types of debit card.
A method of paying regular amounts
automatically. You instruct your bank
to pay the money for you to a particular
person or company. It’s your
responsibility to change the payment
if it needs to alter.
A type of pension scheme designed to
be good value for money by having low
charges, flexible payments and so on.
Usually it means a personal pension
that meets these conditions, but some
types of occupational scheme can also
be Stakeholder schemes.
A document from the bank or building
society which shows all your recent
payments into and withdrawals from
your account. You should check it with
your own records.
A pension paid to you when you retire
by the State. The amount you get will
depend on your National Insurance record
(or on that of your marriage partner).
Where stocks and shares are bought
Store cards are like credit cards,
but are available from shops rather
than banks. They can only
be used to buy things at particular
shops. Anything you spend on your store
card is borrowed money. If you do not
pay off the full amount each month
you will start paying interest on it.
Your surname is your last name or family
name. For instance, Nigel Parker’s
surname is Parker.
Types of debit card. Your account may
be checked if you are paying out a
large amount but not always. This means
that it is possible for you to go overdrawn
on your account.
TAKE HOME PAY
The money you actually get
paid after deductions such as income
tax and National Insurance Contributions.
You may pay local taxes such as Council
tax. This money is used to pay for
local services such as libraries and
You are taxed in a variety of ways,
for example, by paying income tax on
your wages, by paying VAT when you
buy certain goods, by paying the road
fund licence for a car. These taxes
are used to finance services such as
the National Health Service, Armed
Forces and education which are of benefit
This code, with special tables, tells
your employer how much tax-free pay
to give you each pay period. Your tax
code is worked out from your tax allowances
and other tax adjustments.
TAX THIS PERIOD
Shown on a pay slip - how much income
tax you have to pay this pay period.
It is worked out from tables using
your tax code.
A 12 month period running from 6th
April one year to 5th April the next
year. Taxes, such as income tax, are
worked out over this period.
Someone who rents where they live.
The time for which something lasts
e.g. how long you have to pay back
TERM OF THE LOAN
Generally, the longer the period you
borrow the money for, the lower the
interest rate. But this will still
add up over the time that you’re
paying the money back.
THIRD PARTY INSURANCE
Third party insurance means that your
insurance company will pay out if you
accidentally cause damage to another
person or their car. Adding in ‘fire
and theft’ means that your car
is covered should it be stolen or damaged
On a pay slip - this is the total amount
that will be taken from your gross
pay. What is left after this is your
Any payment in or out of your account.
When you travel abroad you may want
to take out travel insurance. Many
countries will not treat you if you
have an accident or fall ill unless
you can pay – and medical bills
can be extremely expensive. Some travel
insurance policies will cover such
events as the cost of flying you home
if necessary, reimbursement for lost
luggage or cancelled flights. As with
all insurance policies, it is important
to understand exactly what is covered.
An unsecured loan is the name for a
loan that does not use anything you
own as security. Therefore you cannot
lose your home directly if you don’t
make the payments – but you can
be taken to court and end up having
to pay back the money. Your ‘credit
rating‘ may also be affected
if this happens – this means
that most financial companies will
refuse to lend you money.
The bills for electricity, water, gas
You can get a reduction in your insurance
premium if you agree to pay the first
part of every insurance claim yourself.
The insurer will then pay for anything
more than this.
WHO YOU BORROW FROM
High street banks and building societies
are competing with each other to lend
you money. The interest rates they
charge are set by market forces.
Take cash out of your account.
The Working Families Tax Credit is
a new way for working parents to claim
financial support from the government.
The amount of help you can get depends
on your income, how many children you
have and whether you have to pay for
childcare. You can find out more about
the Working Families Tax Credit from
your local Benefits Agency Office,
New Deal Adviser, Job Centre or Tax
This glossary is based on
the glossary used in the FSA framework provided with the kind
permission of the FSA (Financial