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Home > Housing > Money advice and support > Financial terms explained

Financial terms explained

 

Annual Percentage Rate (APR)

The amount of interest paid on money borrowed

Balance

The amount of money held in a bank account at a given moment

Bankrupt

A person who is legally declared as being unable to pay their debts

Breach

When a person breaks a law, agreement or code of conduct

Buffer zone

When a Bank or Building Society allows you to withdraw more money that is in your account without charging you. E.g. you only have £6 but they let you withdraw £10

Cold calling

The process of approaching new customers by calling them on the telephone and the person was not expecting the call

Consolidation loans

Taking out one loan to pay off many others

Credit check

A report on a person’s history of borrowing and repaying money

Credit rating

Your worthiness of getting credit based on your history of borrowing money and repaying it

Direct Debit

A payment which is taken directly from a person’s bank account at regular intervals to pay money owed

Fraud

Wrongful or criminal deception intended to result in financial or personal gain

Illegal Money Lenders

A person who lends money illegally and charges high rates of interest

Interest

Money paid regularly at a particular rate for the use of money lent, or for delaying the repayment of a debt

ISA

A type of savings account

Protection Insurance

An insurance product that ensures repayment of loans if the borrower dies, becomes ill or disabled, loses a job, or faces other circumstances that prevents them from earning income to repay their debt

Mortgage

A loan to finance the purchase of a property which has specified payment periods and interest rates

Overdraft

A tool which is used to cover when more money is taken out of a bank account than is actually available

Paypoint

A terminal usually found in supermarkets, newsagents and garages where you can pay household bills, load up gas and electricity meters or top up mobile phones

Savings

A fund of money that has been saved over a period of time

Secure loan

Money borrowed which is backed up by an asset e.g. a car or property which can be sold to repay the debt if the person is unable to meet the repayments

Standing Order

An instruction a bank account holder gives to their bank to pay a set amount at regular intervals to another account

State Benefits

Money given by government to people who need financial help for example those that do not have a job or are disabled

Tax

Money paid to the government to pay for some goods and services such as the emergency services

Unsecured loan

Money borrowed which is not backed up by an asset

Value Added Tax (VAT)

Tax that is charged on most goods and services