Glossary

Glossary

Description

AER

Annual Equivalent Rate - this illustrates what the interest rate would be if interest was paid and compounded once each year. This allows individuals to compare more easily what return they can expect from their savings over time.

As every advertisement for a savings product which quotes an interest rate will contain an AER, you will be able to compare more easily what return you can expect from your savings over time.

Annual interest

Interest is paid on an annual basis.

Bank of England Bank rate

The interest rate published by the Bank of England in connection with its open money market operations.

Cash ISA

A Cash Individual Savings Account - accounts designed to enable an individual to save without paying income tax on their savings.  For more details, take a look at our guide to ISAs.

Fixed rate

A rate of interest that is fixed for a period of time.

Fixed term

A fixed period of time that money is deposited for, agreed on opening the account.

Gross

Gross rate means we will not deduct tax from the interest we pay on money in your account. It’s your responsibility to pay any tax you may owe to HM Revenue and Customs (HMRC).

ISA allowance

The amount allowed to be invested in an ISA which is free of income tax.

Lump sum

A one off amount of money an individual wants to make into an account.

Monthly interest

Interest is paid on a monthly basis.

p.a.

Per annum meaning every year.

Regular savings

Saving regularly (e.g. every month) into an account.

Tax-free

Tax-free is the contractual rate of interest payable where interest is exempt from income tax.

Variable rate

A rate of interest that can change at anytime up or down.

Withdrawal

When instructions are carried out to pay money out of your account (e.g. cash taken out of an account).