banking jargon

Banking Jargon Buster: What Those Terms Actually Mean

We’re all used to seeing various amounts of banking jargon in our mail and on statements from the bank.

But do you know what all those terms actually mean?

It can be very easy to skip past them thinking we understand them, so today we’re going to clear them up once and for all.

In this short guide I’m going to debunk banking jargon so we’re all clear on what the bank is talking about.

Banking jargon debunked

APR

This is the annual percentage rate of interest, usually found on a loan or mortgage.

It will usually be displayed in brackets and represents the true cost of of the loan or mortgage as it shows the additional payments beyond the interest rates.

Bank statements

This is something your bank sends you detailing the monthly transactions for the relevant account.

You can make a request to have them sent, but you usually receive one monthly.

Certified documents

Basically, these are photocopies of original documents  that you have had signed off by a professional i.e. a doctor, solicitor, bank official, post office official, accountant or teacher.

The professional must also state on the document that they have seen the original document  and verify that these are genuine copies.

They must date the document and put their full name, address and profession.

Charges

This is money the bank takes off you for services rendered.

Charges your bank may add include overdraft fees, missed Direct Debit charges, charges for bouncing cheques, interest on overdraft, plus any charges that a business account would normally incur.

Credit rating

A rating given to a person or business from the credit industry.

Your score is obtained from the individual’s credit history and these details are available from specialist organisations such as Experian and Equifax.

Credit scoring

This is a way lenders determine an individual’s credit-worthiness.

In this process a company will take information from an application form when applying for credit and considering the answers given.

There are certain responses that will attract higher scores than others, and depending on your total score the organisation will decide whether or not they want to do business with the individual.

Credit-worthiness

This is the decision of the organisation which is deciding on whether they take the individual on as a customer.

For instance, you may be considered credit-worthy by one organisation, but not another.

Every organisation has their own criteria and some may see you as a higher risk than others,

County Court Judgement (CCJ)

This is when a judge in a small claims court, or county court finds against and individual and they are issued with a County Court Judgement against them.

A CCJ is recorded nationwide and by the credit tracking organisations such as Experian and Equifax.

This means that anyone wanting to know the credit-worthiness of an individual can see that the County Court Judgement exists on their credit file.

Once the debt is repaid, it is shown as such and it reduces the credit risk associated with the person with the CCJ.

Direct Debit

An amount of money taken from a bank account.

It is set up by the recipient and can vary in exact time and amount.

Endowment mortgage

Over this type of mortgage interest only is paid over the term and the capital is repaid at the end of the term from an endowment policy.

Interest

An amount paid on money over time.

If you borrow money, interest will be paid on the loan.

if you invest the money, interest will be paid where appropriate to the investment.

Interest rates are usually  kept in line with the banks base rate of interest and is expressed in percent.

ISAs

Meaning Individual Savings Account.

These are available for any UK residents over the age of 18, although there are mini ISAs available to 16 and 17 year olds.

Investment limits apply to the total contributions you’re able to make each tax year and not to the total in the iSA itself.

ISAs can be cash, stocks and shares or life insurance.

Money laundering

This is money gained from crime that is put into a bank account so it can be accessed safely by criminals and terrorists.

Money laundering makes the proceeds of illegal activities easier to get to and spend.

Overdraft

This is when you have  a minus figure in your account.

It can be authorised with the bank for an agreed amount, or unauthorised where the bank has not agreed to the overdraft because the customer has not requested one, or the customer represented to great a risk for the  bank to offer the facility.

Payee

This is the person receiving the payment.

It often applies to cheques.

If you receive a cheque you are the payee, if you are the person or company who wrote the cheque you are the payer.

Phishing

This is when a criminal uses the internet to attempt to fraudulently obtain personal details of peoples accounts so they may access and use the account themselves, usually to take money out of.

Standing order

This is a regular payment made out of a current account which is a set amount and is set up by the account holder.

Final word

Banking jargon can be confusing at times, hopefully now you have a better understanding of what all those terms mean.

If there is anything else you are unsure of leave a comment in the comments section below and we will explain it all!

 

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