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A-Z of Financial Terms

Accommodation
Where you live. This includes living with your parents, in a hostel, renting somewhere or buying on a mortgage.

Accurate Figure
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.

ACT
Stands for Automated Credit Transfer. An electronic payment between bank accounts.

Administration Order
An administration order is one option you may consider if you are struggling to manage your debts. The County Court will order you to make a single payment every month to the court. The court will then divide this up and distribute it to your creditors.

AER
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.

Affordable Credit
This is credit which is available at a reasonable rate of interest. Some people may struggle to access affordable credit, for instance if they have a poor credit history.

After Tax
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. Older people may get a higher allowance.

Ageism
Ageism is when someone is discriminated against because of their age.

All Risks
This means that your possessions are covered by the contents insurance policy even though you have taken them outside your home.

APR
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%.

Arrears
If you miss a payment you should have made on a debt, then you are said to be ‘in arrears’. The arrears are the amount you should have paid.

Assets
Things of value. When it comes to investments, your assets are the things you buy when you invest, such as shares in a company or a property.

ATM
Stands for Automated Teller Machine (also known as ‘cash machines’). These allow you to withdraw money. You can find them in places like banks and shopping centres. In order to be able to use a cash machine you'll need a cash withdrawal card and your PIN.

Attachment of Earnings
If you have an attachment of earnings granted against you, your employer will be instructed to make deductions for the money you owe directly from your wages.

Available Credit
This is the amount of money the store card or credit card company will lend you now. That is, your credit limit less the amount you have already borrowed. You can use this money to buy goods or as a loan.

BACS
Stands for Bank Automated Clearing System. It is a system for transferring money electronically. Can be used to send money between accounts. Many employers pay wages through BACS.

Bailiffs
Bailiffs are authorised to recover a debt on behalf of the creditor you owe money to. If you let them into your home they may be able to take your possessions in order to pay off the money you owe. They cannot usually enter by force.

Balance
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.

Balance Brought Forward
The balance that was shown on your last statement.

Balance Transfer
A balance transfer is when you move the balance of one account into another. This can help save you money if you transfer debts to an account which will charge you less interest.

Bank
A commercial organisation that provides a range of financial services, such as current and deposit accounts. Banks must be authorised to take your money.

Bank Account
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, and a deposit account is for savings.

Bank Details
Your bank details include your account number and sort code. You will be given this information when you open your account and must be careful who you share it with.

Bank Loan
Money you borrow from your bank for a pre-arranged interest rate. Usually banks will run a credit check on you before agreeing to give you the money.

Bankruptcy
Bankruptcy is a way of dealing with debts that you cannot pay by using any assets that you have to pay your debts. After a period of time usually one year most of your outstanding debts are written off and you can make a fresh start (discharge).

Base Rate
This is also called the ‘bank rate’. This is an interest rate set by the Bank of England, which all other banks then base their interest rates upon.

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´s no risk of going overdrawn and running up overdraft charges.

Basic Rate Taxpayer
You are allowed a certain ‘Personal Allowance’ of income each year which you do not have to pay tax on – if you get any more than this you will have to pay 'basic rate' tax on it.

Basic State Penson
The pension you will receive from the Government when you retire as a result of the National Insurance (NI) contributions you made during your working life. See our Pensions section for more information.

Benefits
Welfare benefits are financial support from the government to help support those on low incomes or who may need assistance for other reasons.

Birth Certificate
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.

Booking Fee
Whenever you book anything from a holiday to tickets for a gig, you may have to pay a booking fee to secure your place. You will need to make sure you have budgeted for this extra cost.

Borrowing
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 agreement.

Bounced Cheque
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.

Budget
This means working out your income and outgoings so that you can see how much money you have left over to spend or save, and decide on your financial priorities. your 'budget' is the amount you have planned to spend.

Budget Sheet
This is where you record your budget. It is usually easiest to set it out as a table, listing all your sources of income and how much you get for each and then all your outgoings and how much you spend on each one.

Buffer Zone
Some bank accounts offer what is known as a buffer zone (a free, temporary overdraft), often of around £5-£10. You are allowed to go overdrawn by this amount without any charges or penalties being added to your account.

Building Society
An 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.

Buildings Insurance
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.

Buying on Credit
When you buy something on credit you are borrowing the money to pay for it. You’ll have to pay this money back later and you may be charged interest, meaning you will pay more overall. See our Buying on Credit section for more information.

Calendar Month
The months on the calendar e.g. January, February etc. The calendar months are generally longer than 4 weeks

Cancellation Rights
Your right to cancel an agreement. Cancellation rights vary according to the individual contract and depending whether you sign in your own home or in an office or shop. Make sure you know your rights before you buy.

Capital
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.

Capital Gains
Capital gains are profits made from investments. They are subject to Capital Gains Tax.

Capital Growth
The amount your capital has grown by; the increase in value of an investment.

Care Homes
As you get older you may need more support in your everyday life. This can be provided in different ways depending on the level of help you need.

Cash
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.

Cash Card
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.

Cash Inflow
The receipts of your business. If your receipts are bigger than your payments, you have a net cash inflow.

Cash Machine
Also known as an ATM or ‘hole in the wall'. These allow you to withdraw money. You can find them in many places including banks and shopping centres. In order to be able to use a cash machine you'll need a cash withdrawal card and your PIN.

Cash Outflow
Payments out of your business. If your receipts are less than your payments, you have a net cash outflow.

Cashflow
A record of all the money coming into the business less all the payments as they are made, measured over a particular time.

Catalogue
Goods are shown in the pages of the catalogue. You can buy them on credit and pay in weekly or monthly instalments. 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.

Cavity Wall Insulation
This is when the gap or ‘cavity’ in your external walls is filled. It helps insulate your home and could save you around £110 a year on heating bills.

CCJ
Stands for County Court Judgement. A judgement made by the county court stating repayments you must make to your creditors. County Court Judgements are recorded and may prevent you being offered credit in future.

Charges
Fees and interest which you have to pay, for example, when you borrow money or buy on credit.

Charging Order
If a creditor has a CCJ against you, they may also be able to apply for a charging order. This secures the loan on to your property.

Cheque
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.

Cheque Clearing
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.

Cheque Guarantee Card
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.

Child Maintenance
If a child’s parents do not live together, then the parent who has the main care of the child is entitled to receive child maintenance payments from the other parent to help them care for the child.

Child Trust Fund
A long term savings account which could be set up for your child to access when they turned 18. The government has announced no new Trust Funds may now be set up, however if your child already has one you can continue to operate it in the same way.

Chip and PIN
Chip and PIN is a method of paying for goods using a debit or credit card. Rather than you having to sign to verify the payment, with chip and pin you have a 4-digit code which you enter into the card reader, just as you would at a cash machine.

Civil Partner
Civil partnerships give same-sex couples equivalent rights and responsibilities to couples who are married.

Code of Conduct
A code of conduct is a list of guidelines for how people should behave and conduct business. There may be sanctions for those who do not stick to their code of conduct.

Commercial Property
Commercial property is property used for business purposes, where people do not live.

Company Pension
Also known as ‘occupational pensions’, these schemes set up by an employer. Employees have to join the scheme to be eligible and may have to make contributions. See our Pensioms section for more information.

Comparison Website
Comparison websites allow you to compare prices for goods and services in order to ensure that you are getting the best deal possible.

Composition Order
A composition order means that only part of the debt included in your administration order needs to be paid off. This may be suitable for those who are unlikely to be able to manage to pay off all of their debts over a reasonable period of time.

Compound Interest
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
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.

Conditional Sale
You take the goods and use them but do not own them until you have made the last payment. See our Buying on Credit section for more information.

Consolidation Loan
A single large loan you take out to pay off all your debts. It can make your money easier to manage as you only have to make payments to one creditor; however you should think carefully before taking on any further debts as this may cost more overall.

Consumer
When you buy something you are a consumer.

Consumer Rights
Whenever you purchase goods or a service you are entitled to certain rights. These can vary depending on the situation, so it's important to always check before you buy.

Contents Insurance
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.

Contributions-based
Some benefits are based on how much you have paid (or been credited with) in National Insurance contributions over your working life.

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 for you.

Council Tax
Tax paid to the local council for local services. For example, libraries, police, local roads etc

County Court
The County Court is a local court which deals with claims such as those relating to debt repayment, family issues such as divorces and housing problems.

County Court Judgement
Also known as CCJs. A judgement made by the county court stating repayments you must make to your creditors. County Court Judgements are recorded and may prevent you being offered credit in future.

Court Fines
Sentences of court fines are usually given for ‘low-level’ offences. Court fines should be considered priority debts as the court can take action against you if you don’t pay.

Credit
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 Card
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 immediately.

Credit Check
When you apply for certain financial services, the company you apply to will run a credit check on you. This means using your credit history to decide whether you represent a ‘good’ risk based on your past borrowing behaviour.

Credit Debt
A credit debt is money you owe because you have previously been lent it as credit in order to purchase goods. This may be from a credit card, store card, catalogue agreement etc.

Credit History
If you’ve had trouble paying loans before, or you have any court judgements against your name, you may find that the only lenders that will offer you a loan charge very high interest rates.

Credit Limit
The maximum amount the store card or credit company will lend you altogether at any time.

Credit Rating
Your ‘credit rating’ is a score lenders will give you based on how you have borrowed money in the past, whether you have made payments on time and so on. Different lenders may give different scores.

Credit Record
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.

Credit Reference Agency
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.

Credit Risk
The chance that you might not repay any loan or credit you are given.

Credit Score
A score given by a shop or credit agency based on your personal and financial circumstances to help them decide whether to give you credit. There is no such thing as a ‘universal’ credit rating as different credit companies can score you differently.

Credit Union
A credit union is a community bank, where people who have a common bond come together to save money. You may also be able to get a low cost loan from the credit union depending on your savings. See our Credit Unions section for more information.

Creditor
A creditor is someone to whom a debt is due. This word is often used to describe the person that lends you money.

CSA
Stands for Child Support Agency. The CSA can help you and your ex-partner sort out a fair arrangement for child maintenance payments if you feel you would struggle to come to an agreement between yourselves.

Current Account
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 may be able to get an overdraft.

CV
Stands for Curriculum Vitae. Your CV sets out your skills and past experience and is used by prospective employers to decide if you are right for a job. You should make sure you keep your CV up to date.

Debit
Money which is taken out of an account is ‘debited from’ that account.

Debit Card
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 internet.

Debt
If you are in debt you owe money to someone e.g. a bank. They are known as the creditor.

Debt Advice Agency
Will offer advice and assistance with your debts. Some may charge for this service, while others will offer it for free, so make sure you check costs.

Debt Collection Agency
Also known as debt purchase companies. Sometimes creditors sell debts to specialist collection agencies for them to recover. Debt collectors don’t have the same powers as bailiffs and cannot enter your home or seize your possessions.

Debt Management Company
Deal with your creditors on your behalf. You make regular payments to them and they will then distribute this to pay off your debts. Some debt management companies charge a fee for their service.

Debt Relief Order
DRO is a legal process that allows for your debts to be written off after a year if you cannot pay. They are suitable for people who rent their home, have few assets, very little spare income and you will need specialist debt advice to apply for a DRO

Debtor
A person who owes money.

Defaulted
Failed to make payments; or failed to pay off the debt.

Dependents
People who are financially dependent on you. This is usually children who live with you, but it could be elderly relatives or someone you care for.

Deposit
An amount of money paid by you to make sure you get the goods. You may need to pay a deposit when getting goods on credit.

Direct Debit
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.

Discharged From Debts
Debts are cleared and you can start again with a fresh slate. This is not an easy solution or a quick fix and will usually only be offered by creditors once you have made an attempt to pay off some of what you owe or as a last resort if you can't pay.

Discount
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.

Discretionary
Payments which are discretionary are not automatically available; cases are judged individually to decide where the money would be best spent.

Discrimination
When someone is treated differently because of their race, gender, age, sexuality, religion or belief, disability or because they are married or pregnant.

Disposable Income
This is the amount of money you actually have available to spend after deducting taxes etc.

Dividend
A dividend is a share in the company's profits which is paid to all shareholders.

Doorstep Lender
Personal loan companies who will come to your home to cllect payments. Often charge higher rates of interest than lenders who do not offer this service.

Double Glazing
Double glazing your home can help keep it warmer, saving you money on your electricity bills.

Driving Licence
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 police.

DWP
Stands for the Department for Work and Pensions. This is a government body which deals with welfare and pension policy and is responsible for operating Jobcentre Plus and the Pension, Disability and Carers Service.

EHIC
European Health Insurance Card. UK residents are entitled to free/reduced cost healthcare in European Union countries. In order to get treatment, you will need to have one of these cards. You can apply online at https://www.ehic.org.uk/Internet/home.do.

Electoral Roll
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 for credit.

Employee
A worker engaged to personally complete tasks for their employer. Usually has to attend work on a regular basis, and will receive a regular wage, with tax and National Insurance deducted. Will have rights such as the right to the National Minimum Wage.

Employee NIC
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.

Employer
Your employer is the person or organisation who has hired you to work for them. This could be anyone, from a next door neighbour who pays you to babysit for them, to a huge multi-national company which may employ thousands of people.

Employment Tribunal
Employment Tribunals hear cases relating to disputes around employment. The decisions they make are legally binding, but they are usually less formal than a court.

Energy Efficiency
This is the process of reducing the amount of energy needed in your home by reducing wastage. This can help save you money and also benefits the environment.

Equity
Equity is the difference between the value of your home and the amount you owe on your mortgage. For instance if your home is worth £100,000 and your mortgage is £75,000, the equity in your home is £25,000.

ESA
Stands for Employment and Support Allowance. This is intended to replace Incapacity Benefit and Income Support. For those who suffer from illness or disability, ESA provides financial support and help getting back into appropriate work.

Estate
Your estate is all your property, money and belongings. When you die, this will be divided up according to your will, if you’ve left one. If you do not have a will, your estate will be divided up according to the law.

Estimate
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.

Excess
Some 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.

Exclusions
Almost all insurance policies have exclusions. These describe events that are not covered by the policy.

Expenditure
Your expenditure is the money you spend. It includes things like: rent/mortgage, food, utility bills, council tax, transport costs, child care, TV licence, mobile phone, clothes and shoes, insurance, and other expenses.

Expiry Date
On plastic cards - after this date your card cannot be used.

Extended Warranty
Covers the cost of repairing the item if it is broken or damaged. Extended warranties can be quite expensive, so think whether you really need one or whether the manufacturers’ guarantee (which generally lasts a year and is free) will be enough.

Fee
A sum of money you pay, for example, to have a loan or credit arranged for you.

Final Salary Scheme
Provides you with a retirement income based on how much you are earning when you retire. These schemes may pay up to two-thirds of your final salary – depending on how long you have been a part of the scheme.

Finance Company
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.

Financial Adviser
An individual or firm that can assess your financial needs and offer advice. Advisers may be tied to a particular product, or may be independent. An adviser must be authorised by the Financial Services Authority (FSA).

Financial Details
These include information about your bank accounts such as account numbers, sort codes etc. You must never give these details out to anyone you don't know and trust, as they could be used to try and take money from you or steal your identity.

Financial Records
These will include statements, bills, receipts etc.

Financial Services
Financial services include bank accounts, loans and credit. You can access financial services through banks, building societies, credit unions, high street lenders and community finance institutions.

Financial Situation
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.

Financial Statement
Your financial statement is similar to a budget sheet and should show how much money you have coming in, what you are spending, how much you owe and what you can realistically afford to repay.

Financially Dependent
Someone is financially dependent on you if they rely on your income in order to live. This may include your children, partner or other relatives.

Fixed Interest Rate
Interest rates can go up and down. A fixed interest rate account means that you are guaranteed that the interest you get or pay will stay the same.

Fixed notice
Fixed notice accounts usually don’t allow you to take your money out without letting them know a certain amount of time in advance. They may also penalise you for taking money out early.

Fixed term
Fixed term accounts 'lock' your money in for a certain amount of time. During this period yo may not be able to withdraw any money, or may face a penalty if you do.

Fraud
Fraud is when someone deceives or attempts to deceive someone else, usually in order to take their money.

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 Taxes
Saving in these accounts means that you will not pay tax on the interest your money earns.

Freeholder
A freeholder is the owner of a property.

Freeze interest
This means that creditors will stop adding interest to the amount you owe, giving you a chance to get your finances in order and draw up a repayment plan without worrying that your debt is continuing to grow.

Fronting
When you name someone as the main driver of a vehicle when in fact they are not. Young drivers may name a parent as the main driver for example in order to reduce their insurance premiums. This is illegal and if you are caught your policy will be invalid.

FSA
Stands for Financial Services Authority. The FSA is an independent organisation which regulates the financial services industry in the UK.

FSA-registered
Companies providing financial services should be registered with the FSA. This way you will know they are properly regulated and meet he FSA’s standards.

Furnished
If a property is described as being ‘furnished’ you could expect to be able to move in and live there immediately. Usually as a minimum there should be a table and chairs, sofa, a bed, heating appliances, curtains, floor coverings, a cooker and a fridge.

Gilts
Gilts are bonds issued by governments, and are often considered to be one of the safest types of investment. However because of the low level of risk, they do not usually offer very high returns.

Grants
A grant is money given which does not usually need to be paid back. Grants may be made to individuals or groups, and may come from charities, companies or individuals. Grants are usually awarded to assist with something in particular e.g. energy bills.

Gross
Indicates an amount from which certain items have yet to be deducted

Gross Interest
Interest on savings before any tax is taken off.

Gross Pay
Your pay before anything is taken away from it, like income tax and National Insurance Contributions.

Guarantor
By standing as a guarantor, you agree to take responsibility for a loan if the person who originally applied for it fails to keep up with their agreed payments.

Health Insurance
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.

High Court
The High Court handles the most high profile cases in criminal and civil law.

Higher Rate Taxpayer
If your income is above a certain level, you will be classed as a higher rate taxpayer. Higher rate taxpayers will need to complete an annual tax return declaring their income and paying the extra tax they owe.

Hire Purchase Agreement
You take away the goods and use them but you do not own them until you have made the last payment of your agreement. Cars are often bought this way as is furniture. See our Buying on Credit section for more information.

Home Contents Insurance
Home contents insurance covers you in case anything happens to your belongings. Depending on what level of cover you decide to have, you can cover your possessions against loss, theft and so on, both inside and outside your home.

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 agreed overdraft.

Housing Association
A housing association (also known as an RSL, Registered Social Landlord or Social Housing Provider) is an independent, not for profit company providing low cost ‘social housing’.

How Much You Borrow
Some lenders alter the interest rate according to how much you borrow. Usually if you are borrowing a smaller amount of money, you will have to pay a higher rate of interest than you would on a larger amount of money.

Identity
Your identity is who you are. You may be asked to show documents that prove that you are who you say you are, for instance a valid passport. For more information see our Types of Identification page.

Identity Fraud
Identity fraud is when someone unlawfully uses your details without permission, usually in order to obtain goods and services.

In Credit
‘In credit’ means that there is money available to spend in the account.

Incapacity Benefit
If you became unable to work because of illness or disability before 27th October 2008, you may be eligible for Incapacity Benefit. After this time claims will usually need to be made for Employment and Support Allowance (see above).

Income
Your income is the money you have coming into your household. It includes things like wages, benefits (like Income Support or Child Benefit) and child maintenance payments you receive.

Income Disregard
Your income can rise or fall by a certain amount over the year without an adjustment being made to the amount of Tax Credits you are entitled to that year. If your income rises by less than this, you will not be treated as having received an overpayment.

Income Support
This is extra money to help those who are on a low income. It is usually for those who for whatever reason do not need to sign on as unemployed.

Income Tax
Everyone can earn up to a certain amount each year before they have to pay tax, this is called your ‘Personal Allowance’. You will have to pay tax on any income over this amount, whether it comes from work or interest on savings or shares.

Income-based
Income-based benefits are available depending on how much money you have to support yourself in income or savings, rather than being based on the National Insurance contributions you have made.

Independent Advice
If advice is independent it means the adviser has no vested interest in swaying you towards any particular option, and will simply consider what is best for your circumstances.

Index Linking
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 year.

Inflation
Inflation refers to the general increase of prices year on year throughout the economy.

Insolvency
Insolvency (or bankruptcy) is when you do not have enough money to pay your debts so your assets are sold off instead to try and raise the necessary funds. Any unpaid debts are then written off.

Insolvency Practitioner
If you are being made bankrupt you will go through an insolvency practitioner who will advise and help you through the process.

Insolvency Register
This is a register of those who are currently bankrupt or have had a bankruptcy end in the last 3 months. Your details will be shown on here if you become bankrupt.

Instalments
Weekly or monthly repayments made to pay off goods bought on credit or to pay off a loan taken out to buy them.

Instant Access
Means you can get your money back immediately without having to wait for any notice period.

Insurance
Insurance is a system in which you pay into a policy which will then pay out should something happen which you need financial help to deal with. You can obtain a range of different types of insurance to cover you in different situations.

Insurance Brokers
Insurance brokers are specialist companies who sell insurance. It’s usually best to check with several companies before you buy, as you may be able to get a better deal by shopping around.

Insurance Cover
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.

Insurance Premium
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.

Interest
Interest is the charge paid when borrowing money. It can apply in one of two ways, either as the reward you get for lending your money to say, a bank or a building society, or the cost you pay when you borrow money through a loan or credit agreement.

Interest Payments
The payments of interest you have to make on a loan or credit agreement.

Interest Rate
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 of 15%.

Interest-free
If you are offered credit ‘interest-free’ this means you will not have to pay interest on any money borrowed. These deals may only last for a certain amount of time, so you need to make sure you have paid off the balance before the offer runs out.

Interest-only Mortgage
With an interest only mortgage you only have to pay off the interest charged on what you've borrowed. The regular repayments you will have to make will be smaller, but you'll have to pay more in the long term.

Introductory Discount
Some financial products may offer an introductory discount such as a particularly good rate of interest for new customers. It's important to know when these offers end so you can check you’re still getting a good deal.

Investment
An investment is money put into stocks, shares, property etc in the hope that it will increase in value over time and earn a profit. Investments generally carry a level of risk – the higher the level of risk, the greater the potential rewards.

ISA
Individual Savings Account. A savings plan in cash, shares or a mixture of both. While ISAs offer tax advantages, there are limits to what and how much you can invest. See our Savings and Investments section for more information on ISAs.

Jobcentre Plus
Jobcentre Plus is part of the Department for Work and Pensions (DWP). It is responsible for assisting people to find work and for administering certain benefits.

Joint Account
A joint account is a bank account in the name of two or more people. Anyone whose name is on the account can withdraw money from it, so you need to think carefully and be sure you trust anyone who you open a joint account with.

Joint Tenancy
Where the tenancy agreement for your home is held in two people's names. This gives you certain rights e.g. if one joint tenant dies, the property will pass directly to the surviving partner, however it also means you are jointly liable for rent etc.

JSA
Stands for Jobseeker's Allowance. This is the main benefit you are likely to receive if you are unemployed or working less than 16 hours a week on average. To qualify, you must be actively seeking employment.

Junior ISA
Junior ISAs are due to be launched by the Government to replace Child Trust Funds. The junior ISA will be a simple tax free savings account, meaning no tax will be charged on any money you earn as interest on savings held in it.

Leasehold Property
Leasehold ownership essentially means a long tenancy. The property may be bought or sold within the period of the lease, and the leaseholder has the right to own, occupy and use the property for the duration of the lease.

Legal Aid
If you are on a low income and cannot afford to pay for legal representation, you may be entitled to legal aid to help with the costs.

Legal Status
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.

Legislation
Legislation may refer to either the process of law-making, or the law itself.

Liability Order
A liability order gives the local authority powers to enforce payments of council tax debts. They can do this through an attachment of earnings, use of bailiffs, deductions from benefits, a charging order on your property or even sending you to prison.

Life Insurance
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.

Loan
A sum of money that you borrow, either informally (from friends or family) or formally (from the bank). You will usually be charged interest.

Loan Shark
An illegal, unlicensed money lender who is likely to use force to collect a loan

Loss
The opposite of profit. When you take out investments such as shares, you have to decide what level of risk you are prepared to take. Usually the greater the risk, the greater the potential profits; however the potential losses will be greater too.

Loyalty Cards
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 as air-miles.

Lump Sum
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.

Magistrates Court
Where many criminal and civil cases are completed.

Maintenance Grant
The maintenance grant is money given to higher education students from low income families to help support them with living costs.

Maintenance Loan
The maintenance loan is a loan for students in higher education to help support them with living costs while at university.

Maximum Withdrawal
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.

Mental Wellbeing
Mental wellbeing refers to an individual’s state of mental health and happiness.

Meters
The meters in your home measure your gas and electricity usage. You need to be able to read your meter in case you disagree with your utility bills. You may have a pre-payment meter fitted, which you have to add credit to before you can use any energy.

Minimum Payment
On credit or store card statements - the minimum amount you must pay each month off your debt.

Money for Creditors
Once you have worked out your budget, any money you have left over after paying necessary expenses is money you can pay to creditors to clear your debts.

Money Laundering
Money laundering is a process used by criminals to disguise profits made from illegal activity.

Mortgage
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.

Mortgage Interest
This is the interest you pay on your mortgage.

Motor Insurance
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.

National Insurance Card
This is the plastic card you’re given just before your 16th birthday. Your employer uses the number to deduct money from your wages to pay for benefits that you might need to claim, like contribution based ESA, and your State Pension when you retire.

National Insurance Number
This is the code on the plastic card you’re given just before your 16th birthday. Your employer uses this to deduct money from your wages to pay for contribution based benefits, and your State Pension when you retire.

National Minimum Wage
Most workers in the UK are entitled to receive the National Minimum Wage for the work they do. The amount you get will depend on your age.

Negative Equity
If you are in ‘negative equity’ then the amount you owe on your mortgage and other debts secured against your home is more than the overall value of the property.

Net
Indicates a sum of money from which certain amounts have already been taken away.

Net Income
Your net income is the total you earn in a week, month or year after any deductions for tax and National Insurance.

Net Interest
This is interest which has already had the tax taken off it.

Net Pay
The pay you actually get. All the deductions have been taken off before you get it.

New Deal
New Deal is a Government programme that aims to give unemployed people the help and support they need to get into work. Everyone on New Deal gets a personal adviser who is their point of contact throughout the programme. The personal adviser prepares a plan to get you into a suitable job.

NHS
The NHS (National Health Service) provides healthcare throughout the UK. This is usually free.

NICs
NICs or National Insurance contributions are payments made from your wages which then entitle you to certain benefits including State Pension and contribution based ESA.

Nominal Value
The nominal value of shares is the fixed price assigned to them. This remains constant regardless of the market price of the shares.

Non-dependent
If you have someone else living with you who is not financially dependent on you (such as a grown up son or daughter or another adult relative) then this may affect your entitlement to benefits.

Non-priority Debts
Non-priority creditors (those who you owe credit debts such as catalogues) can take you to court to recover the debts but cannot take any other action unless you default on a court order. They are more likely to accept reasonable repayments.

Notice
The time you must wait to get your money after telling, your bank or building society that you want to take it out. If you don´t wait this time you may be penalized, for example, by losing interest.

Notice Seeking Possession
If you do not pay your rent your landlord may send you a Notice Seeking Possession (also known as Notice to Quit). This informs you that unless the arrears are dealt with then the landlord will apply to court for possession of the property.

Occupational Pension
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 the owner.

Office of Fair Trading
The Office of Fair Trading (OFT) is responsible for enforcing laws to protect consumers and make sure companies are acting fairly.

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.

Official Receiver
The Official Receiver is the court officer who will deal with insolvency, arrange the dividing of your assets and so on. Your creditors will only be allowed to deal with the Official Receiver, not with you directly.

Outgoings
Your outgoings or expenses are all the money you spend. This can include everything from rent to bills to holidays.

Outright Possession Order
If an outright possession order is given, you have to leave the property by the date shown. You should seek advice immediately.

Overdraft
If you spend more money than you have in your account you will go overdrawn. You can arrange an overdraft with the bank, who will lend you the money and charge interest. If you go overdrawn without asking, the bank may refuse to honour your payments.

Overdraft Limit
When you set up an overdraft you will usually have an arranged limit. If you go over this limit you may be charged, so it is important to be aware of your spending and contact the bank in plenty of time if you think you may need to extend your overdraft.

P45
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.

Part-furnished
There is no legal definition of what a landlord should include in a ‘part furnished’ property. Generally you might expect to find all fixtures, for instance cooker etc, but it is best to check with your landlord to be sure what is included.

Passport
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.

Pay In
Putting money into your account. This could be cash or cheques.

Pay Period
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.

Payday Loan
Short-term loans of small amounts. Usually approved and money deposited in an individual’s account very quickly. However they often charge an extremely high rate of interest, meaning it is a very expensive way to borrow money.

PAYE
PAYE stands for Pay As You Earn. Workers and employees will generally pay their income tax through PAYE, meaning it will be deducted from their wages each week or month.

Payee
The person the money is being paid to when you write out a cheque.

Paying-In Slip
A form you can use to pay cash, cheques, or both at the same time into your account. Your bank or building society will give you a book of paying-in slips when you open an account, and there will be some at the back of your chequebook as well.

Payment
Money you pay out, for example, on materials you need for your business, interest on loans, money for services such as gas & electricity.

Payment Book
A payment book is the record of payments you have made.

Penalty Fee
You may be charged penalty fees for a number of reasons, for instance if you miss a payment or go over your agreed overdraft limit. Your lender should make you aware of what these fees are and when they will be charged.

Pension
An income paid out after someone retires. There are different types of pension schemes: Occupational, Stakeholder, State and Personal. For more information see our Pensions section.

Pension Deduction
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 payslip as ´pension deductions´.

Personal Allowance
The amount of income you can receive tax free each year. How much you are allowed depends on your circumstances.

Personal Loan
Many different companies offer personal loans. These are usually loans that you can use to pay for whatever you want. As with all loans, make sure you check the interest rate and conditions first.

Personal 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 schemes.

PIN
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.

Policy
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.

Policyholder
The owner of an insurance policy. Usually this will be the person covered by the policy.

Pooled Investments
Pooled investments are when a group of people put all their money together to make a large pot which they then divide between several different investments. This reduces the amount of risk for each individual investor.

Premium
The amount you have to pay to buy insurance. You may be able to pay in monthly instalments.

Pre-payment Meter
If you have a pre-payment meter you have to pay for the energy before you use it, usually with a card, key, or tokens. It can be a good way to manage your budget; however companies usually charge more for people paying through pre-payment meters.

Priority Debts
These are debts which are more important than others because the law lets creditors take serious action against you if you don't pay. Priority debts include things like your mortgage because your home could be repossessed if you are in arrears.

Private Landlord
A company or individual who rents property for their own profit.

Pro Rata
Meaning ‘in proportion’. In the case of a ‘pro rata’ offer being made to creditors this would mean each was offered an amount in proportion to what they are owed.

Profit
The amount of money gained, minus the costs of the process undertaken.

Proof of Identity
When opening a bank account you will often be asked to show documents proving your identity. See our article on Types of Identification for more information.

Quarterly Statements
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.

Rate of Interest
The amount of interest you receive or are charged, depending on whether you are saving or borrowing money.

Receipts
Money coming in, for example, from selling goods and services or taking out a loan.

Recruitment Agency
Recruitment agencies can help you find employment. They will advertise jobs and can put your name forward for work you may be interested in.

Redundancy
When you are dismissed from your job because your employer needs to reduce their workforce.

Reference
When you apply for a new job you may be asked to provide a reference. This will usually be from a past employer or someone else (not family) who can verify that you are a good worker and would be a good candidate for the job you’ve applied for.

Refund
A refund is when you get your money back, either because the goods you purchased are not fit for purpose or because you change your mind. There may be rescrictions on where and when you are entitled to a refund. Always check your cancellation rights.

Registered Company
The government keeps a list of registered UK companies. If you are considering doing business with a company and want to check they are genuine, you can look at this register to see if they are included.

Rent
The money you pay to your landlord in exchange for them letting you live in their property.

Repayment Mortgage
When you make repayments on both the interest on your mortgage and towards the amount you borrowed. You will have to pay more each month than if you were on an interest-only mortgage, however it may cost you less overall.

Repayments
The sums of money you pay back weekly or monthly on your loan or credit.

Repossession
Repossession is when your house is taken to pay off debts you owe.

Responsibilities
What you should do e.g. finish paying for goods taken out on credit.

Return
The amount you get back on your capital. A general rule is that the higher the return the more risky the investment.

Rights
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.

Risk
Another name for chance or uncertainty. Different financial products and types of investment involve different levels of risk. Higher risks investments are associated with higher profits, however there is also greater chance of loss.

RSL
Stands for Registered Social Landlord. An RSL (also known as a Housing Association or Social Housing Provider) is an independent, not for profit company providing low cost ‘social housing’.

Salary
The money you receive in return for doing your job.

Savings
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 egg’.

Savings Account
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 added.

Scam
A scam is a type of fraud, where someone attempts to deceive you in order to take your money. Scams come in all sorts of shapes and sizes and anyone can be a victim.

Second Mortgage
This is when you borrow money against the value of your home. If you do not keep up with the repayments, your home may be at risk of repossession.

Secured Debts
This means the debt is being borrowed against the cost of something you own, so the lender can be sure that even if you can’t make the repayments they'll still get their money back as they can take your property instead.

Secured Loan
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.

Self-employed
If you work for yourself, for instance running your own company or as an independent contractor or consultant you are self-employed.

Shareholder
Someone who owns shares.

Shares
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.

Shop-bot
A website which allows you to compares the price of a certain product across a variety of online sites to help you find the best deal.

Short Term
Usually means a period of time no longer than, say, five years - and often a lot shorter.

Signatory
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.

Small Print
The terms and conditions. Often outlines technical and legal details. You need to be aware of whets in the small print to make sure you know what you are getting for your money and what services you will receive.

Social Fund
The Social Fund provides the money to pay Community Care Grants, Crisis Loans and Budgeting Loans.

Social Tariff
Many energy companies have ‘social tariffs’ which are low cost rates offered to customers who are vulnerable or on low incomes.

Special Support Grant
A grant available to higher education students from low income families to help support them with living costs while they are at university.

Stakeholder Pension
These are a type of personal pension where the funds you pay in are invested on your behalf. When you reach pension age you can then buy an annuity which will give you a regular income for life.

Standard Excess Charge
If you have to make a claim, you agree to cover the costs of the first part of the claim (up to your excess charge) out of your own money. The higher an excess you are prepared to accept, the lower your premiums will usually be.

Standing Order
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 be altered.

State Pension
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).

Statement
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.

Stock Market
A public network where stocks can be traded for agreed prices.

Stocks
Stocks represent the original money paid into a business by its founders. The term is often used interchangeably with ‘shares’ to refer to the process of investing in a company.

Store Card
Store cards are similar to credit cards, but are available from shops rather than banks. They can only be used to buy things at particular shops. If you do not pay off the full amount each month you will start paying interest on it.

Student Account
Many banks offer special student bank accounts for people in higher education. These usually include an interest free overdraft along with other free gifts and deals.

Student Credit Card
Often once you have a student account with a bank they will also offer you a student credit card. Credit cards can be useful, but should be treated with caution. See our section on Buying on Credit for more information.

Student Loan
Made up of two parts: tuition fee loan and maintenance loan. You can apply for either part or for both if you wish. Student loans are intended to cover the cost of your fees and your living costs while you’re at university.

Suspended Possession
You can usually stay in your home as long as you meet certain conditions, for instance you may have to pay off rent arrears at a certain amount each week. If you do not keep to these conditions your landlord could apply to the court to have you evicted.

Take Home Pay
The money you actually get paid after deductions such as income tax and National Insurance Contributions.

Tax
Tax is charged on many things, including all money you earn over your Personal Allowance, things you buy and so on. It is a way for the government to raise the money they need in order to run the country.

Tax – this period
Shown on a payslip - how much income tax you have to pay this pay period. It is worked out from tables using your tax code.

Tax Code
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 Credits
Tax credits are payments from the government. If you are responsible for a child you may be entitled to child tax benefit, if you work but are on a low income, you may be eligible for working tax credit. You can claim both if you are entitled to them.

Tax Free
Not taxed. Some savings accounts, known as ISAs, are tax free. This means you do not have to pay tax on any interest you earn on your savings, even if they are income over your Personal Allowance.

Tax Year
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.

Taxation – local
You may pay local taxes such as Council tax. This money is used to pay for local services such as libraries and the police.

Taxation – national
You are taxed in a variety of ways, for example, by paying income tax on your wages or by paying VAT when you buy certain goods. These taxes are used to finance services such as the NHS, Armed Forces and education which are of benefit to everyone.

Term
The time for which something lasts e.g. how long you have to pay back a loan.

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.

Terms and Conditions
Terms and conditions (or ‘the small print’ as they are sometimes known) are the details of how your account or agreement will operate. It’s important you take the time to read and understand these before you accept an agreement.

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 by fire.

Time Order
A time order is a way the court can give you more time to pay off your arrears. The order can alter how much you have to pay each month, the overall time you have to pay off the money, and sometimes even the interest rate you are being charged.

Total Deductions
On a payslip - this is the total amount that will be taken from your gross pay. What is left after this is your take-home pay.

Tracker Rates
Tracker rates are usually set to always be a certain amount above the Bank of England’s base rate. This means that they may rise or fall in line with the rate set by the Bank of England.

Trade Union
An organisation of workers who work together to support members. Unions can call strikes and negotiate with employers on behalf of all members. They can also represent and assist individual members in disputes over employment.

Transaction
Any payment in or out of your account.

Travel Insurance
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.

Trust Fund
Trust Funds are set up in order to provide financial assistance to those in need. Often you may have to meet specific criteria in order to qualify for help. If you receive a grant, you do not usually have to pay it back.

Tuition Fees Loan
A loan for higher education students to pay the tuition fees charged by their university.

UK-Regulated
Most banks are UK-regulated, meaning they must conform to UK standards. If a UK-regulated bank fails, your savings are protected up to a value of £85,000 (or £170,000 for a joint account).

Undischarged Bankruptcy
While you are undergoing bankruptcy your bankruptcy is described as ‘undischarged’. If you are an undischarged bankrupt you are subject to certain restrictions and may find it hard to obtain credit.

Unfurnished
If a property is unfurnished this means you will have to provide all furnishings yourself. This can be expensive and you will need to make sure you have budgeted for the extra cost.

Unlicensed Lender
Anyone who lends money needs to have a license to do so. Those who don’t are acting illegally. They are likely to charge extremely high rates of interest and may resort to threats or violence if you do not make the payments they demand.

Unsecured Loan
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.

Unspent Convictions
Criminal convictions remain on an individual’s record for a certain length of time. During this time they are said to be ‘unspent’ and should be declared in certain circumstances, for instance when applying for insurance.

Utility Bills
The bills for electricity, water, gas and telephone.

Variable Rate
A variable rate may increase or decrease according to changes in the interest rate set by the Bank of England.

VAT
VAT stands for Value Added Tax. It is added to everything you buy.

Voluntary Excess
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.

Wages
Your wages are the money you receive in exchange for the work you do. You may be paid in cash, by cheque or into your bank account, and will usually receive your money either daily, weekly, 2 weekly, 4 weekly or monthly.

Warrant of Possession
In order to evict you, your landlord must apply for a warrant of possession. This gives them the right to take possession of your property.

Water Meter
A water meter can be installed at your property as an alternative to paying for your water at the set rate for your property. This can work out better value for some people, especially if you have more bedrooms in your house than people living there.

Welfare Benefits
Welfare benefits are provided by the state to help support those who need financial assistance.

Withdraw
Take cash out of your account.

Working Families Tax Credit
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 Enquiry Office.

Write Off
Cancel the debt. In some extreme circumstances your creditors may be prepared to write off or cancel debts if there is no way you can pay them. Debts may also be written off as part of a process such as bankruptcy.

 
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