371821
| Question | Answer |
| AER | Annual equivalent rate if the interest that will be earned on the money in one year, and takes into account how often the provider pays the interest (ie monthly or annually) the effect of compounding the interest and any fees and charges |
| Bank rate | The interest rate that the Bank of England uses when it lends money to other banks. Financial services providers take account of the Bank rate when they decide how to set interest rates on their own products |
| Child Trust Fund (CTF) | A long-term savings account only available to children born between 1.9.02 and 2.01.11. CTF's were set up by the government to encourage people to build up savings for their children |
| Consumer Prices Index (CPI) | One of the means the government uses to measure inflation. It is calculated by checking the price of a representative sample of goods on a monthly basis - this enables statisticians to measure how much prices are rising or falling |
| Financial Conduct Authority (FCA) | One of the two main regulators of financial services in the UK (the other is the Prudential Regulation Authority) |
| Financial Services Compensation Scheme (FSCS) | A compensation scheme that pays compensation to account holders of up to £85,000 per provider if the provider goes into default (in other words cannot pay account holders the money they have in their accounts) |
| HMRC | Her Majesty's Revenue & Customs - the organisation that collects taxes on behalf of the government |
| Income Tax | Tax paid on earnings from employment, self-employment and interest on savings |
| Individual savings account (ISA) | An account that pays interest tax-free on savings up to a certain level. There are two types of ISA - cash ISAs and stocks and shares ISAs. Junior ISAs are available for people under 18 |
| Inflation | A rise in prices, which means that the purchasing power of money falls |
| Instant access account | An account from which the holder can withdraw their money at any time without losing any interest |
| Interest | Money either paid to an account holder by the provider, or charged to the account holder by the provider. |
| Interest rate | The amount, expressed as %, that a financial services provider charges a borrower when it lends money, or pays to a saver |
| National Savings and Investment (NS&I) | A provider that is backed by the Treasury (the government department that manages the UK's finances) |
| Notice account | An account for which the holder hs to tell the provider in advance if they want to withdraw their money. If they do not give the provider the required amount of notice ,the lose interest on their savings |
| Personal allowance | The amount that an individual can earn before they have to pay income tax |
| Rate of return | The amount a saver gains in interest on their savings. eg an account paying 0.2% AER offers a lower rate of return than one paying 0.4% AER |
| Retail Prices Index (RPI) | One of the ways the government measures inflation. It is calculated by checking the price of a representative sample of goods on a monthly basis but unlike CPI it also takes into account mortgage interest payments and other costs associated with home ownership |
| Savings bonds | A saving product held for a fixed period eg 2 years. The holder can only make a limited number of withdrawals, or none at all, during that period without incurring a penalty |
| Stocks and shares | Stocks, shares and equities are all words used to describe an investment that gives the holder part ownership of a company. If the company's value increases, so does the value of your share. If its value falls, so does the value of your investment. Shares are bought and sold on stock exchanges |
| Tax year | Also known as the financial year, the tax year runs from 6th April to 5th April in the following year. The tax people owe is calculated according to how much they have earned April-April rather than January-December |
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