keywords Flashcards
What is Annual Equivalent Rate (AER)
The AER is the equivalent interest rate revised from the nominal APR, which is the amount of interest someone has to pay back in a year, if the interest is compounded on a yearly basis.
AER = APR / 12
What is nominal rate?
The nominal rate is equivalent to the APR (annual percentage rate), which is the amount of money someone has to pay back in a year.
What is a bond?
A bond is a savings account that offers a fixed rate of interest for a fixed term.
What is a credit union?
A credit union is a financial co-operative ran by, and for the benefit of, its members.
Who are the Financial Conduct Authority (FCA)?
The Financial Conduct Authority (FCA) is the UK’s regulator responsible for the way financial firms (banks. credit unions, etc.) market and sell their products (loans, bonds, etc.).
What is an Individual savings account (ISA)?
An individual savings account is a tax-free savings and investment account. They have been available since 1999 and the interest is not declared as income. the only downside is if the interest paid is poor because you won’t be receiving much money in return?
What is insolvency?
Insolvency is when a company cannot afford to pay its debts; it is similar to ‘bankruptcy’ for an individual.
What is interest?
Interest is either the money earned after investing money into a savings account/property/business/etc or the money that has to be paid back from a loan.
What is a Lifetime ISA?
A Lifetime ISA is a type of ISA (individual savings account) that is offered especially for individuals aged between 18 to 24. It lets them save up to £4,000 a year and receive a government bonus.
Who are the Prudential Regulation Authority (PRA)?
The Prudential Regulation Authority (PRA) are the UK’s regulators, responsible for making sure that financial firms have the authority to operate in the UK and are financially sound (won’t scam you).
What is a credit card?
Credit cards are little plastic cards and are a form of borrowing offered by banks, building societies and other specialist firms.
What is meant by the term financial planning?
Financial planning is the act of making plans to meet short term and long term needs.
What is a mortgage?
A mortgage is a special type of loan that helps people to buy a house.
What is net income?
Net income is the amount a person earns after deductions have been taken by the government.
What are personal loans?
Personal loans are offered by banks, building societies and some specialist firms. It is usually paid back in a shorter term than mortgages and tend to be unsecured, therefore providers charge much higher interest rates to cover the risk.
