1.5 - savings

Question 1

AER

Answer 1

annual equivalent rate is interest that will be earned on the money in one year and takes into account how often the provider pays the interest, the effect of compounding the interest and any fees and chargers.

Question 2

bank rate

Answer 2

interest rate that Bank of England uses when it lends money to other bank.

Question 3

child trust fund

Answer 3

long-term savings account only available to kids born between 1st spot 2002 and 2nd jan 2011. CTFs were set by government to encourage people to save money for their children. Now replaced by junior ISAs.

Question 4

Consumer Prices Index

Answer 4

One of the means the government uses to measure inflation. Is calculated by checking the price of a sample of good on a monthly basis. Enables statisticians to measure how much prices are rising/falling.

Question 4

Consumer Prices Index

Answer 4

One of the means the government uses to measure inflation. Is calculated by checking the price of a sample of good on a monthly basis. Enables statisticians to measure how much prices are rising/falling.

Question 5

Coronavirus

Answer 5

Known as Covid-19, respiratory illness that causes mild to moderate symptoms but call prove severe/fatal for some. Caused a global pandemic with wide-ranging economic effects.

Question 6

Financial Conduct Authority

Answer 6

One of the two main regulators of financial services in the UK.

Question 7

Financial Services Compensation Scheme

Answer 7

compensation scheme that pays compensation to account holders of up to a certain amount per provider if the provider goes into default. (cannot pay account holders the money they have in their accounts)

Question 8

HMRC

Answer 8

her majesty’s revenue and customs - organisation that collects taxes on behalf of the government

Question 9

income tax

Answer 9

tax paid on earnings from employment, self-employment and interest on savings .

Question 10

individual savings account (ISA)

Answer 10

Account that pays interest tax-free on savings up to a certain level. 2 types of ISA - cash isa and stocks and shares. Junior ISAs for people under 18.

Question 11

inflation

Answer 11

rise in prices, means that purchasing power of money falls.

Question 12

instant access account.

Answer 12

account from which the holder can withdraw money at any time without losing interest

Question 13

interest

Answer 13

Money either paid to an account holder by the provider, or
charged to the account holder by the provider. Interest is paid
on savings accounts and some current accounts and charged on
borrowing, eg an overdraft. Each provider decides the rate of
interest it will pay or charge, depending on the type of account

Question 14

interest rate

Answer 14

the amount that a financial provider chargers a borrower when it lends money, or pays to a saver.

Question 15

junior isa

Answer 15

long-term savings account set up by parent/guardian specifically for Childs future. Can only access the money once child is 18.

Question 16

national savings and investment

Answer 16

provider that is backed by the treasury.

Question 17

personal allowance

Answer 17

amount that an induvidual can earn before they have to pay income tax

Question 17

notice account

Answer 17

account for which holder has to tell provider in advance if they want to withdraw money. If they do not give provider required amount of notice, they lose interest on their savings.

Question 18

personal savings allowance

Answer 18

amount of savings interest that can be earned before saver pays tax. Amount of the allowance varies according to how much other income the saver has earned in the tax year.

Question 19

rate of return

Answer 19

amount a saver gains in interest on their savings.

Question 20

Savings bond

Answer 20

a savings product held for a fixed period. Holder can only make a limited number of withdrawals, or none, during that period without incurring a penalty

Question 20

Retail Prices Index

Answer 20

One of they ways government measures inflation. Is calculated by checking price of a sample goods on a monthly basis but unlike CPI, also takes into account mortgage interest payments and other costs associated with home ownership

Question 21

starting-rate band

Answer 21

amount of savings that someone can earn tax-free if their total income is less than the personal allowance

Question 22

stocks and shares

Answer 22

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.

Question 23

tax year

Answer 23

(financial year) tax year = 6th April to 5th April following year. Tax people owe is calculated according to how much they have earned April to April.