Savings Jargon Buster

The world of finance has some strange words and abbreviations which can often appear to be a completely different language. We have produced this Jargon Buster to help you to make dealing with financial matters as straight forward as possible.

AER

Is the Annual Equivalent Rate which illustrates what the interest rate would be if interest was paid and added each year.

Bonus account

A savings account that opens with an additional bonus rate of interest for a stated period of time.

Capitalised Interest

The interest your money has earned, which is added to your original investment.

CHAPS

Clearing House Automated Payment System. A Telegraphic Transfer system which allows you to make same working day withdrawals and deposits for your investment accounts. Same working day payment is guaranteed if the instruction is received before 3pm.

Child Trust Fund (CTF)

A Child Trust Fund is a long-term savings or investment account for children.  New accounts cannot be created but existing accounts can receive new money and be transferred between CTF providers. They have been replaced by Junior ISAs.

Easy Access Account

An account which allows you to withdraw your money without restrictions, usually a variable rate.

Faster Payments Service (FPS)

Payment system which allows transfers of up to £100,000. The faster payments scheme aims to make same day payments where the instruction is received before 8pm. Payments may take up to the end of the next working day to arrive.

Financial Conduct Authority (FCA)

The FCA is the Financial Conduct Authority, a regulatory body in the UK. The FCA regulates financial firms providing financial services to consumers and operates independently of the Government.

Financial Services Compensation Scheme (FSCS)

The Financial Services Compensation Scheme was established under the Financial Services and Markets Act 2000. Its purpose is to protect your deposits should Skipton Building Society be unable to repay them. Your eligible deposits with Skipton Building Society are protected up to a total of £85,000 per depositor. You can find further information on our FSCS page.

Flexible ISA

With a Flexible ISA, you’ll be able to withdraw money and put it back without affecting your ISA allowance, as long as it’s done in the same tax year and the account remains open.

Gross Interest

Interest paid before the deduction of income tax.

Interest Rate

An interest rate is the amount of money paid for the use of money and is most often expressed as a percentage rate. You can receive interest on the money you save, but will pay interest on money borrowed. Interest rates vary across financial service providers so it is recommended that you compare rates to find the best product for your needs.

ISA (Individual Savings Account)

A savings account which is not taxed by the government, launched on 6th April 1999 as the replacement for PEPs and TESSAs. The government sets a limit on the amount of money you can save in any one tax year. The tax year runs from 6 April one year until 5 April the following year.

Junior ISA

Junior ISAs were introduced on 1 November 2011 as a replacement to Child Trust Funds (CTFs). A child can open their own account from age 16, otherwise a person with parental responsibility can do it. They are available to those who are under the age of 18 and do not have a CTF.

Maturity

The day when an account reaches the end of its term.

Net Interest Rate (to 5 April 2016)

The rate of interest which would be payable after allowing for the deduction of income tax at the rate defined by law. Since the introduction of the PSA, we pay all savings interest gross.

Notice Account

An account which requires a specific period of notice to be given by the account holder before money can be withdrawn without penalty.

p.a

Per annum, means every year.

Prudential Regulation Authority (PRA)

The PRA is a part of the Bank of England and is a regulatory body responsible for the prudential regulation and supervision of banks, building societies, credit unions, insurers and major investment firms.

R85 Form (to 5 April 2016)

An HM Revenue & Customs form which non tax-payers may be eligible to complete in order to have their interest paid gross.

Section 975 Certificate (to 5 April 2016)

Shows the amount of interest your savings account has earned and the amount of tax you have paid in a tax year. It is provided on request.

Tax-free

Tax-free indicates that interest earned is exempt from UK income tax.

Variable Rate

A rate of interest that may change over time.

Year End

The end of the accounting year, usually when interest is paid. This is given in the product information which was supplied at the time of application.
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