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Moneypedia - Finance terms Category: Economy and Finance Date & country: 25/09/2007, UK Words: 127

ABI
The ABI is the trade association of the British insurance industry More...

Actuary
A professional who uses statistical data to decide on the level of insurance premiums under different circumstances

Advance
A term meaning the amount of money borrowed under a credit agreement

Adverse Credit
An adverse credit rating can make it difficult to get credit More...

AER
Annual Earnings Rate, a measure of return on a savings account or investment, expressed as a percentage

Affinity Card
An affinity card is a kind of credit card linked to a charity, company, or other organisation. More...

Amex
A common abbreviation for American Express, the credit card and finance company

APR
Abbreviation for Annual Percentage Rate, a standardised way of calculating the interest on financial products to make comparison easier

Baby Bonds
An informal term used to describe Child Trust Funds when they were first introduced, and not now widely used

BACS
Banks Automated Clearing System - a method of making payments electronically, with funds taking up to 3 days to clear

Balance Transfer Fee
Many credit cards now charge a fee for transferring a balance More...

Barclaycard
The first general purpose credit card to be introduced into the UK in 1967, issued by Barclays Bank

Base Rate
The reference interest rate set by the Bank of England, which serves as the basis for tracker mortgages and other credit

Basic Bank Accounts
No-frills bank accounts suitable for people with poor or no credit ratings More...

Bridging Loan
A short term, high value loan, usually used to purchase property before existing property is sold

Buffer Zone
A facility of some bank accounts which allows a certain amount of overdrawn balance before charges are imposed

Buy to Let Mortgages
A specific type of mortgage used by landlords to fund the purchase of property they will be renting out

Capital Gains Tax
A tax levied on profits made from the buying and selling of assets including property, shares, and valuables

Capped Rate
A kind of mortgage which features an interest rate which is guaranteed not to go above a certain level, no matter how high the base rate rises

Car Insurance
The minimum insurance legally required covers damage you cause to another vehicle (3rd party). Comprehensive insurance also covers damage to your own car

Cash ISA
A tax free savings vehicle which allows deposits of up to £3,000 a year in cash

CCJ
CCJ stands for County Court Judgement More...

Child Trust Fund
An investment account opened with a voucher from the government, issued to parents of children born since September 2002. Matures when the child reaches 18 years

Chip and Pin
A system of authorising credit card payments by typing a PIN number rather than signing an authorisation slip

CML
The Council of Mortgage Lenders, the trade association for the UK residential mortgage industry

Credit Card Surfing
The practice of regularly switching credit cards to take advantage of introductory offers

Credit File
Your credit file is a record of your financial activity More...

Credit Scoring
The process of combining information from a person's credit file with details given on an application form to decide whether or not to extend finance

Creditor
A creditor is someone to whom you owe money More...

Customs and Excise
The government agency formerly responsible, amongst other things, for the collection of VAT. Now merged with the Inland Revenue to form HM Revenue and Customs

Day Trading
Buying and selling shares over a very short period, attempting to profit from small fluctuations in the market rather than long term trends

Debit Card
Debit cards are a convenient payment method which don't involve borrowing More...

Debt
Consumer debt levels are at record highs More...

Debt Consolidation
The practice of paying off many smaller debts by taking out a single loan, with the aim of reducing monthly repayments or overall interest charges

Debt Management
The process of renegotiating credit agreements to make repayments more manageable for people struggling with debt

Debt Snowball
A method of eliminating debt quickly by concentrating efforts on one debt at a time

Deferred Loans
A kind of loan where the start of repayments is delayed for a number of months

Demutualisation
The process of floating a mutual society onto the stock market, in the process usually generating a windfall bonus for its members

Deposit Account
A bank account designed for savings rather than day to day banking

Direct Banking
The operation of a bank account via the internet or telephone, and without the use of a branch

Direct Debit
A payment method where the payee requests funds electronically from the payer's account.

Dormant Bank Accounts
Up to £5bn may be sitting in dormant personal bank accounts More...

Early Repayment Charge
A fee imposed when a debt is cleared before the originally agreed term, intended as recompense for interest payments lost by the lender

Egg plc
The world's largest purely online bank, majority owned by insurance company Prudential

Endowment Mortgage
A kind of mortgage where only interest was repaid directly, with the original advance intended to be cleared by a stock market investment maturing at the end of the term

ERNIE
Electronic Random Number Indicator Equipment, the device that randomly picks the winning Premium Bond numbers

Ethical Investment
Banking and other financial services which don't invest in unethical areas such as the arms trade or environmentally damaging activities. Championed in the UK by the Co-op Bank

Execution Only
A service provided by stockbrokers who buy and sell shares according to client instructions, without offering any advice or management

Executors
The people entrusted with carrying out the instructions contained in a will

Experian
Experian is one of the major credit reference agencies

Final Salary Scheme
A kind of pension scheme where the pension payments are calculated as a percentage of the salary earned in the last year of employment

First Time Buyer
Someone buying property for the first time and not involved in a chain

Flat Rate Credit Cards
Flat rate credit cards charge a single interest rate for all kinds of transaction More...

Flexible Mortgage
A kind of mortgage allowing some variability in repayments such as overpayments, underpayments, or payment holidays

Flood Risk Insurance
Buildings insurance specifically for property situated on a flood plain or other area at known risk of flooding

FSA
The Financial Services Authority, or regulator of much of the financial services industry More...

Fuel Poverty
Defined as a household having to spend 10% or more of income on energy costs More...

Guarantor
One who backs credit extended to another, and guarantees repayment if the borrower defaults. Often a parent or other close family member

Higher Lending Charge
A fee often imposed on borrowers when the loan to value (LTV) is higher than 90% i.e. when a borrower wishes to borrow more than 90% of the value of the property the loan is secured on

Holding Company
A company which exists only to own another company, and carries out no trading of its own

Holiday Insurance
Another name for travel insurance

Home Insurance
A term for insurance covering your home, whether buildings insurance, contents, or both

Homeowner Loan
Another term for a secured loan, or loan where the value of the borrower's house is used to guarantee repayment

IFA
An Independent Financial Advisor, who advises impartially on the full range of financial products available rather than ones available from a single company they are tied to

Insider Dealing
The offence of buying or selling shares based on knowledge gained that is not available to the market in general

ISA
Individual Savings Account, a tax-free investment vehicle for cash, equities, or a combination of the two

Islamic Finance
Sharia-compliant forms of finance that don't involve the charging or receiving of interest, which is forbidden under Muslim laws

Junior Market
A stockmarket for trading of smaller companies or those not yet ready for a full listing. An example is the Alternative Investment Market (AIM) operated as a junior market of the London Stock Exchange (LSE)

Kerb Market
A term used to describe trading activities taking place outside of a recognised stock exchange

Loan Shark
A popular term for an unlicensed lender of money, often charging exorbitant interest rates and employing dubious collection methods

LSE
An abbreviation of London Stock Exchange, one of the world's oldest stockmarkets

LTV
Short for Loan To Value, a measurement of the size of the loan compared to the value of the property it is secured against

Marbles
A direct banking brand of HFC Bank, itself owned by HSBC. Most well known for the Marbles credit card but also offering loans and insurance products

Market Capitalisation
The total value of a listed company's traded shares. For example, a company with a million shares trading at 50p each would have a market capitalisation of half a million pounds

MBNA
A major issuer of credit cards in both North America and Europe, with a particular emphasis on affinity cards

Mini ISA
A variant of the tax-free savings scheme where only the cash element is used, and no equities investment

Mortgage
A loan used to purchase property, and secured on the property it finances

Mortgage Term
Simply the length of time it takes to repay a mortgage. The standard term is 25 years, but with increasing property prices 30 years is becoming more common

Multi Trip Insurance
A form of travel insurance policy covering all travel within a defined period, usually one year

Negative Equity
The unfortunate situation where your outstanding mortgage is larger than the value of your house, often as a result of a property price crash

Net Interest
Interest earned on a deposit, after any tax has been paid

New-for-Old Policy
A kind of insurance where damaged items, however old, are replaced by equivalent new ones

Non Status
Used to describe financial products aimed at people with bad credit ratings

Notice Account
A kind of savings account where you need to provide a period of notice before withdrawing funds, or lose out on interest earnings

Office of Fair Trading
The government office overseeing and regulating business, including some financial services such as unsecured credit and second charge loans

Offset Mortgage
A kind of mortgage which combines your debt and savings into one account, potentially saving you money in interest charges

OFT
Abbreviation for the Office of Fair Trading

Online Banking
The facility to manage your financial affairs over the internet, including checking balances, transferring money and making payments

Overdraft
A feature of some bank accounts where you can carry a negative balance

Overpayments
Feature of flexible mortgages and loans, where you can pay off more than the usual amount if you have spare cash, reducing the outstanding balance more quickly

Payday Loans
A form of short term low value loan, borrowed to cover expenses until your next pay day, when the loan is repaid. Payday loans usually work out to be much more expensive than other forms of credit in terms of APR

PAYE
Pay As You Earn, or the system under which tax is deducted from the wage or salary of employed people before it is paid

Payment Holiday
A feature of some loans and mortgages where you can miss a certain number of payments a year without penalty

Penny Shares
An unoffical term for a share with a low value, although not necessarily as low as a penny. The shares tend to be in companies with a short trading history and are subject to high price volatility, making them attractive to small speculative investors

Pet Insurance
Policy covering costs associated with owning pets, such as vets bills and emergency kennel fees

Phishing
The practice of trying to induce people to reveal personal details via email by pretending to be a legitimate company such as a bank. Any details such as bank account numbers and passwords obtained by this method are usually used to commit fraud

Premium Bonds
A safe form of investment which guarantees you won't lose your money, and gives bond holders the chance to win tax-free cash prizes of up to £1m every month

Prepaid Credit Card
A payment card to which you must credit funds before you use it

Quotation Search
A kind of credit search which isn't recorded on your credit file, and is intended to be used by finance companies in the early stages of deciding whether to offer credit

Rate Tart
Colloquial term for one who switches from credit card to credit card to take advantage of introductory offers, usually balance transfers