• A,B,C

  Annual Equivalent Rate (AER)	Used to compare interest rates on savings accounts.
  Annual Percentage Rate (APR)	The yearly cost of a loan, including interest.
  Arrears	Payments on an account which are overdue.
  Assets	Any items owned which have a value such as cars, property, money, antiques etc.
  Attachment of Earnings Order *	A legal process where a borrower’s wages or other earnings are taken from their employer to pay for a debt.
  BACS	Bankers Automated Clearing System. Electronic transfer of funds between bank accounts.
  Bankruptcy	A process that legally declares a person cannot repay their debts, and provides protection for the debtor (the person who owes money).
  Bank of England Base Rate	The main interest rate in the economy, set by the Bank of England.
  Borrower	Someone who has received money or goods with the promise to pay it back.
  Budget	A plan for balancing your outgoings against your income.
  Capital	The total value of a person’s or businesses assets owned, minus whatever they owe.
  Capital gain	Profit made on an owned item.  For example, if you sell an antique for more than you paid for it, the difference is a capital gain.
  Charging Order	This is an order obtained from a court or judge by a creditor - where a charge is placed on the property of the borrower. You will not be required to pay the debt immediately however you will be unable to sell your house without repaying the creditor and any further interest due.
  Child Support Agency (CSA)	Government body set up to ensure parents who live apart from their children contribute financially to their upkeep, by paying child maintenance.
  Citation/Decree	Scottish version of a County Court Judgement.
  Cleared funds	When you pay money into your bank or building society it takes a few days to process the money through the system.  You cannot access the money until this has happened, once it has the money is know as cleared funds.
  Consumer	A person who uses goods or services.
  Consumer Credit	Credit given by a retail store, bank, finance company, or other lender, mainly for the purchase of consumer goods.
  County Court Judgement (CCJ)	The final decision of a county court requiring the payment of a sum of money by one party to another.
  Court Summons	A set of forms giving a court hearing date and also inviting you to explain your financial circumstances so that the court can determine how much you can afford to pay.
  Credit	Funds to buy goods or services that the borrower will pay back in the future.
  Credit Card	A Plastic card that is used for purchasing goods and/or services against an pre approved credit limit.
  Credit History	A record of every credit transaction you have, have had or applied for, this includes payment details.
  Credit Limit	The maximum amount of credit that a lender will allow a consumer to borrow.
  Credit reference agency	An organisation that collects information on people’s credit history, and reports to potential lenders. The 3 main credit reference agencies in the UK are Experian, Equifax and Callcredit.
  Credit score	An assessment of someone’s ability to pay debts based on their credit history and circumstances. A high rating indicates that the individual is considered less of a financial risk and lenders are more likely to lend to them.
  Creditor	Someone who has lent money or goods to someone.

   

• D, E, F

  Debit	Any transaction that reduces the balance on an account.
  Debit Card	A bank card used to make electronic withdrawals from funds that you have available in a bank account.
  Debtor	Someone who has borrowed money or goods from someone.
  Citation/Decree	Scottish Equivalent to a CCJ.
  Default Notice	An official form which must be issued by a creditor before court action can start.
  Dependant	Someone who is relying on you for support i.e.. Children under 18 years of age or that are in full time education.
  Direct debit	A form of payment agreed by a bank account holder, which authorises a creditor to withdraw varying sums from their bank account.  Often used to pay bills. Creditor controls the amount collected.
  Disposable Income	The income that is left over when your outgoings are subtracted from your income.
  Early Redemption Penalty (ERP) or Early Redemption Charge (ERC) or	The penalty you have to pay if you want to repay a debt before you are due to.
  Endowment	An insurance policy that pays out a lump sum at the end of a set period or on death.
  Equity	The difference between the market value of an asset and the amount of loan or mortgage outstanding on it.  Usually applied to home ownership
  Financial Service Authority (FSA)	The main regulator of the Financial Services industry.
  Financial Statement	A summary of your income and outgoings showing how much money, if any, is left over to pay off your debts.  The Financial Statement is central to any negotiation with creditors or courts.

   

• G, H I

  Gross income	The total amount of money earned (before any deductions such as tax and national insurance).
  Hire Purchase (HP)	A method of purchase often used to buy cars and household items, where the item is legally owned by the creditor until the end of the agreement.  NB. This means even if the item is returned to the creditor the debt can still remain.
  Inhibition or Adjudication*	Scottish Equivalent to a Charging Order.
  Individual Savings Account (ISA)	A form of saving and investing with tax advantages.
  Individual Voluntary Arrangement (IVA)	An agreement between a borrower and their creditors (in England) to pay them off over a period of time.  It is also an alternative to bankruptcy
  Inflation	A rise in general level of prices of goods and services over a period of time.
  Insolvent	Unable to pay ones debts.
  Interest Only Mortgage	A Mortgage where you pay only interest each month, the original loan amount would still be outstanding at the end of the term.
  Interest Rate	A percentage rate, paid on borrowings as a fee.

   

• J, K, L

  Key Facts Illustration (KFI)	Implemented by the Financial Services Authority – to deliver clearer, simpler and more user friendly information to consumers.
  Lenders	Companies which lend money or goods to consumers or companies.
  Lending Criteria	Standards set by the companies, which need to be met before credit is offered.
  Loan	A sum of money lent at an interest rate, with a contract for it to be repaid over a set period of time.
  Loan to Value	The amount a Mortgage Lender will lend, shown as a percentage of the value of the property you are buying.

   

• M, N, O

  Money Laundering	Financial transactions which generate an asset or a value as the result of an illegal act.
  Mortgage	A loan to finance buying a house or land, with that house or land  given as security for the loan
  Mortgage payment protection Insurance (MPPI)	(See PPI below) This is similar to PPI but will cover your mortgage payments usually for up to 2 years if you are made redundant or are unable to work due to illness or injury
  Negative Equity	Having secured borrowing on your house that is greater than the value of your home.
  Net income	The amount of income after all deductions (for example, tax and national insurance).  Can also be called ‘take-home pay’.
  Non-Dependants Contribution	The amount of money paid to you by someone living with you that you are not financially responsibly for. E.g. board/keep
  Ombudsman	Government body who represent the interests of the public by investigating and addressing complaints reported by individual citizens.
  Overdraft	An arrangement with a bank which allows customers to withdraw more funds from a current account than they actually have – a form of lending.

   

• P, Q, R

  Payment Protection Insurance (PPI)	These are usually linked to loans, credit cards or other credit agreements. You pay a premium to an Insurance company and your payments will be covered if you are made redundant or are too ill or injured to work
  Power of Attorney	When one person authorises another person to act on their behalf, and gives them certain legal powers to allow them to do so.
  Priority Debts	Debts which have serious consequences if not paid, such as losing a home, essential services being disconnected or imprisonment.
  Protected Trust Deed (PTD) *	Scottish alternative to an IVA. An agreement between a borrower and their creditors to pay them off over a period of time.  It is also an alternative to bankruptcy.
  Remortgage	Changing your mortgage to a different lender.
  Repayment Mortgage	A mortgage where you pay off a mixture of the original amount borrowed and interest each month (also known as capital and interest mortgage)
  Repayment Vehicle	Investment that will be used to repay the original loan amount on a mortgage, such as an ISA or Personal Equity Plan (PEP)
  Repossession	A legal process which involves a lender taking possession of a borrowers property when repayments haven’t been met.

   

• S, T, U

  Second Charge	If more than one loan is secured on a property, the lender with the first charge on the property has the first rights to the property value in the event of the loan not being repaid. Any additional loans have a second, third or fourth charge which will be repaid after the first charge in the order they were made.
  Secondary Debts	Debts which put the borrower at a less serious risk than Priority Debts if not paid.  Such debts can lead to court action, Charging Orders or Attachment of Earnings.
  Secured Lending	Lending which is guaranteed on either property or land. If the borrower does not pay, the lender can take the property and sell it to pay off the debt. Mortgages are a form of Secured Lending
  Security/Collateral	Something owned by a borrower that a lender has the right to take possession of if the borrower stops (defaults) making repayments.
  Sequestration*	Scottish equivalent to Bankruptcy.
  Stamp Duty	A tax on the purchase of residential property dependent on the purchase price.
  Standard Variable Rate (SVR)	The normal lending interest rate charged by a bank or building society.
  Standing order	A regular (usually monthly) payment made by the bank on your behalf.  Unlike direct debits, details, such as payment amount, cannot be changed unless you inform the bank. (i.e. you are in control)
  Statutory Demand	This is granted by the court - it demands that the borrower either; pays the outstanding amount, offers to secure it debt against a property or offers to repay the debt in a way that is satisfactory to the creditor. If ignored , after 21 days the creditor can petition for a bankruptcy order.
  Summary Warrant*	Scottish Equivalent to a Warrant of Execution.
  Tax Code	Letters and numbers used by employers to deduct tax from earnings of people paid under the Pay as you Earn system. The first three figures of the code followed by a zero is what you can earn each year before paying tax. This information is available on your pay slip.
  Term	Length of a loan

   

• V, W, X, Y, Z

  Unauthorised Overdraft	An arrangement with a bank which allows customers to withdraw more funds from a current account than they actually have – a form of lending. This will not have been formally agreed.
  Unsecured Loans	A loan which is not guaranteed on property or land e.g. personal loan
  Utilities	Services such as gas, water, electricity or phone
  Wage Arrestment *	Scottish equivalent to an Attachment of Earnings
  Warrant of Execution	This is granted by the court - it enables a County Court Bailiff to visit a borrowers address to take goods for sale.

   

* Scottish equivalent to English terminology