Topic 5 key terms(saving products) Flashcards
AER
definition:annual equivalent rate it’s the interest that will be earned on the money in one year and takes into account how often the provider pays the interest
bank rate
definition:the interest rate that the bank of england uses when it lends money to other banks
child trust fund
definition:long-term saving account only available to children born between september 1 2002 and january 2 2011,set up by government to encourage parents to start and set up savings for children
customer prices index
definition:one of the means the government uses to measure inflation,calculated by checking the price of representative sample of goods on monthly basis
coronavirus
definition:caused global pandemic with wide range economic effects
financial conduct authority (FCA)
definition:one of the main two regulators of financial services in the uk
financial services compensation scheme (FSCS)
definition:compensation scheme that pays compensation to account holders of up to a certain amount per provider if the provider goes into default
HMRC
definition:her majesty’s revenue and customs-collects taxes on behalf of the government
income tax
definition:tax paid on earnings from employment,self employment and interest on savings
individual savings account(ISA)
definition:an account that pays interest tax-free on savings up to a certain level, two types ISA-cash ISA and stocks and shares ISA,junior ISA also available
inflation
definition:a rise in prices,purchasing power of money falls
instant access account
definition:an account from which the holder can withdraw their money at any time without losing any interest
interest
definition:money either paid to an account holder by the provider or charged to the account holder by provider,interest is paid on savings accounts and some current account and charged on borrowing
interest rate
definition:the amount expressed as a percentage that financial service provider charges a borrower when it lends money
junior ISA
definition:Long-term savings accounts set up by a parent or guardian
specifically for the child’s future,child can only access the money once they turn 18
national savings and investment (NS&I)
definition: provider that is backed by the Treasury,governments department that manages UK’s finances
notice account
definition: account for which the holder has to tell the provider in advance if they want to withdraw their money
personal allowance
definition:amount individual has to earn before they have to pay income tax
personal savings allowance
definition:amount of savings interest that can be earned before the
saver pays tax,the amount of the allowance varies according to
how much other income the saver has eamed in the tax year
rate of return
definition:the amount a saver gains in interest on their savings
retail prices index (RPI)
definition: another ways the government measures inflation is calculated by checking the price of a representative sample of goods on monthly basis,unlike CPI it also takes into account mortgage interest payments and other costs associated with home ownership
savings bonds
definition:saving product held for a fixed period,holder can only make limited withdrawals or bone at all in fixed period
starting rate band
definition: amount of savings that an individual can earn tax-free if their
total income is less than the personal allowance
stocks and shares
definition:investment that gives holder part ownership of a company
tax year
definition:known as financial year,tax year runs from 6th April to 5th April following year
