KEYTERMS TOPIC 7

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AER
Annual equivalent rate is the interest that will be earned on the money in one year and takes into account how often the provider pays the interest (for example, monthly or annually), the effect of compounding the interest and any fees and charges.
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ASSETS
Things that a person or a business owns. For a person their assets might include property, jewellery or financial products such as company shares.
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BONDS
See savings bonds.
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CASH CARD
A card used to withdraw cash from ATMs or branch counters.
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CASH ISA
An account that pays interest tax-free on cash savings up to a certain level.
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CHANCELLOR OF EXCHEQUER
The British Cabinet minister responsible for financial and economic matters and in charge of the Treasury.
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CHEQUE
A written instruction to a provider.
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CHILDREN'S BOND
An investment bond taken out by a parent, legal guardian or (great) grandparent for a child under the age of 16. Investing between £25 and £3,000, the investor is guaranteed interest at a fixed rate for five years, after which the Bond matures.
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COMMON BOND
An interest or circumstance shared by a group of people, for example working for the same employer or living in a certain area.
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COMMUNICATION CHANNEL
The medium through which information is transferred to its intended recipient, eg email, telephone. In financial services, it refers to the way a customer can contact their provider and manage their account.
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CREDIT CARD
A card that allows the holder to make purchases face to face, online or over the phone, and to withdraw cash from an ATM. Unlike a debit card, where the money is taken from the holder’s own account, transactions are paid by the card provider.
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CREDIT UNION
A mutual organisation (that is, owned by its members) that provides a range of financial products to members, eg savings accounts and personal loans. Members of a credit union must share a common bond.
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CURRENT ACCOUNT
Bank or building society accounts where people can store their money in the form of electronic balances and withdraw it to make payments.
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DEBIT CARD
A card that can be used to withdraw cash, to make face-to-face transactions in, for example, shops, and to make payments online or over the phone.
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DEMUTUALISATION
The process whereby a mutual organisation (eg building society) legally becomes a shareholder-owned joint stock company.
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DIRECT DEBIT
An electronic payment out of an account. The amount and frequency of a direct debit payment can vary.
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DIVIDENDS
A payment of profits from a company to its shareholders, often at twice-yearly intervals, either as cash or (depending on the plan) as further shares of shares.
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FINANCIAL CONDUCT AUTHORITY
One of the two main regulators of financial services in the UK (the other is the Prudential Regulation Authority).
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FINANCIAL SERVICES COMPENSATION SCHEME
A compensation scheme that pays compensation to account holders of up to a certain amount per provider if the provider goes into default (in other words cannot pay account holders the money they have in their accounts).
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INSURANCE
Products that give financial protection against certain events. For example, someone who has travel insurance might be able to claim back the cost of a holiday if they have to cancel through illness.
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INTEREST RATE MARGIN
The difference between the interest rate that a bank charges on borrowing products and the interest rate that it pays on savings.
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LIFE ASSURANCE
A type of insurance policy that pays out a sum of money if the insured person dies.
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LIFE COVER
See life assurance.
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MORTGAGE
A loan taken out to pay for a property, usually over a long term such as 25 years.
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MUTUAL ORGANISATIONS
An organisation owned by its customers, who are also its members, rather than by shareholders.
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NS&I
National Savings & Investments, a provider that is backed by the Treasury (the government department that manages the UK’s finances).
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OVERDRAFT
A facility that allows an account holder to withdraw more money than they actually have in their account. An authorised overdraft is agreed with the bank in advance within certain limits. Exceeding those limits or going overdrawn without permission.
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PERSONAL LOAN
A product that allows someone to borrow a fixed amount over a fixed period at a fixed amount of interest.
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PREMIUM BOND
A lottery bond, issued by NS&I, entered into a monthly prize draw with tax-free prizes or ‘premiums’. Bonds must be held for a full calendar month after the month in which they were purchased, and retain an equal chance of winning until cashed in.
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PREDENTIAL REGULATION AUTHORITY
One of the two main regulators of financial services in the UK (the other is the Financial Conduct Authority).
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PUBLIC LIMITED COMPANY
A large company whose shares are sold and traded to the general public. The shareholders have limited liability, up to the value of their investment, for the company’s debts.
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RATE OF RETURN
The amount a saver gains in interest on their savings. For instance an account paying 0.2% AER offers a lower rate of return than one paying 0.4% AER.
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SAVINGS BOND
A savings product held for a fixed period, eg two years. The holder can only make a limited number of withdrawals, or none at all, during that period without incurring a penalty.
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STANDING ORDER
An electronic payment out of an account. Standing orders are used to make regular payments of the same amount.
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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.
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TRAVEL INSURANCE
A product providing coverage for unexpected events such as trip cancellation, medical expenses, travel delays and other losses incurred while travelling.
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TREASURY
Her Majesty’s (HM) Treasury, the government department responsible for development and implementation of financial and economic policy.
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Other cards in this set

Card 2

Front

Things that a person or a business owns. For a person their assets might include property, jewellery or financial products such as company shares.

Back

ASSETS

Card 3

Front

See savings bonds.

Back

Preview of the back of card 3

Card 4

Front

A card used to withdraw cash from ATMs or branch counters.

Back

Preview of the back of card 4

Card 5

Front

An account that pays interest tax-free on cash savings up to a certain level.

Back

Preview of the back of card 5
View more cards

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