Money jargon A-Z

This advice applies to Scotland. See advice for See advice for England, See advice for Northern Ireland, See advice for Wales

This information applies to Scotland only.

On this page, we explain the meaning of some common financial words. Use our debt and money pages if you need more help. 


This stands for Annual Equivalent Rate. It’s a way of working out the interest you will get on your savings. It’s worked out in a standard way, over a year, so you can compare interest rates directly with each other. The higher the AER, the more money you will get on your savings.


This stands for Annual Percentage Rate. This tells you the cost of a loan, taking into account the interest you pay, any other charges, and when the payments are due. You can use the APR to compare the cost of one loan with another. For example, a loan with 15% APR of 15% is more expensive than one with 11% APR.


This stands for Automated Teller Machine. This is a machine that pays out cash, or a cash machine. To use an ATM, you need a cash card and a personal identification number (PIN).


See Current account.

Accountant in Bankruptcy

This is the person who has responsibility for administering the process of personal bankruptcy and corporate insolvencies in Scotland.

Administration order

This is not used in Scotland. It is a process in court in England and Wales.


An advocate in Scotland provides specialist legal representation and opinions on civil and criminal matters.


This means you owe money. For example, rent or council tax.


This is the term used to describe the legal position if your money or goods are in the control of a ‘third’ party, for example, a bank and the creditor that you owe money to puts a warrant in place to stop you being able to get access to the funds or goods.


These are things you own, like your home or a car. If you’re in debt, you might have to sell assets.


This is the term used to describe the legal position when a creditor can ‘freeze’ the goods of someone that owes money. The creditor can then sell the goods at an auction and keep the money owed.


These are court officials in England and Wales, not Scotland. See Sheriff officers.


This is the amount of money you have in your account or the amount that you owe on your credit or store card. It’s shown on your statement.

Balance transfer

This means moving the money you owe on one credit card to another credit card. 

Bank charges

Banks and building societies charge for some services. You must be given details of the charges before you open an account with the bank or building society.

Bankruptcy (Sequestration in Scotland)

This is a court order that you or your creditors (only if a certain amount is owed) can apply for. It has serious consequences. When you are declared bankrupt you have to hand over a lot of your possessions that can be sold, including your home, if owned wholly or jointly, to a trustee. It is likely that it will be sold but the court does have to take a number of issues into consideration.

A company can also be made bankrupt and will be declared insolvent.


This is a name for a lawyer in the higher courts in England and Wales, not Scotland. In Scotland, the higher courts have Advocates and Solicitor Advocates.


Some social security benefits depend on how much income and savings you have. These are called means-tested benefits. Other benefits don’t depend on your income and savings. These are called non-means-tested benefits.

Benefit overpayments

When you have been paid too much benefit this is called an overpayment. It should be treated as a non-priority debt.


This is a term normally used about an agreement because it cannot be legally avoided or stopped.


If you’ve got debts, you'll need to work out if you've got enough money to pay what you owe. To do this, you will need to work out how much money you've got coming into your household and how much you need to spend. This is called your budget.

Capitalising mortgage arrears

You might be able to clear your mortgage arrears by adding the money you owe to your capital (the amount you borrowed) and paying it back over the remaining period of the mortgage. This is known as capitalising the arrears.

Cash advances

This is when you withdraw money from your credit card, borrowed against your credit limit. You can use an ATM or get the cash transferred into your current account. This can be an expensive way to get cash because you might be charged a transaction fee and interest. 

Charge cards

When you have a charge card, you have to pay off the amount you borrow in full at the end of the agreed period, usually each month. Interest is not charged on the amount you borrow but you may have to pay an annual fee for the card. An example is American Express.


A cheque is a written instruction from you to your bank or building society. It authorises payment from your account to whoever is named on the cheque (called the payee).

Cheque cashers

These are companies where you can take a cheque and exchange it for money. You will be charged a fee.

Conditional sale

This is a way of borrowing, similar to hire purchase. You buy goods on credit and pay for them in instalments. Usually, you won't actually own the goods until you've made the last payment. If you fall behind with the payments, the credit lender may be able to take the goods back (repossess them).

Consolidation loan

A consolidation loan is a single loan that can be used to pay off all your debts and leave you with one monthly payment to this loan.

Continuous Payment Authority 

Continuous Payment Authorities are also called recurring payments. It's when you give a company the long number on your credit or debit card, rather than your account number or sort code. It can be used instead of a Direct Debit or standing order. The company can take payments when they like and change the amount without your permission. Gyms, internet service providers and payday loan companies often use Continuous Payment Authorities. 

County Court Judgement (CCJ)

This is a judgement from the court that operates only in England and Wales. In Scotland see Sheriff Court.


If your account is in credit, it means that you have money available to spend. If you buy goods or services on credit, it means that someone like a bank or other lender has given you the money to buy something.

Credit broker

This is someone who arranges loans and charges you for this service.

Credit card

This is a plastic card issued by a bank or building society that allows you to buy things and pay for them later. You can also use a credit card to withdraw money out from a cash machine. With some purchases using your credit card gives you extra insurance protection. An example of this is Visa.

Credit licensing

It is against the law for someone to offer credit without having a credit license but many people do it. These people are known as loan sharks.

Credit limit 

This is the maximum amount you can spend on your credit card.

Credit reference agency

A credit reference agency holds credit account information so that it can be shared with other lenders when a credit reference check is made on you. It can only be accessed by those lenders who provide the information and who are members of the credit reference agency's credit account sharing scheme.

Credit sale agreement

Under a credit sale agreement, you buy the goods at the cash price. You usually have to pay interest. Repayment is made by instalments until you have paid the whole amount. You’re the legal owner of the goods as soon as the contract is made and the goods can’t be returned if you change your mind.

Credit union

This is a self-help co-operative whose members pool their savings to let each other borrow money at a low rate of interest.


This is someone you owe money to.

Current account

A current account is an account held at a bank or building society that allows money to be paid in or taken out. You can use a current account for things like paying your bills and getting money such as your salary or benefits.

DAS approved money advisor

A DAS approved money advisor has received specialist training and has been approved to work with someone in debt to negotiate a Debt Payment Plan (DPP).


This is the term used when money is taken out of an account.

Debit card

This is a plastic card that can be used instead of cash when you buy something.


Debt is when you owe money to another person or organisation.

Debt Arrangement Scheme (DAS)

This is a scheme set up by the Scottish government to help people manage their debts.

Debt collectors

Many lenders use debt collection companies to collect debts on their behalf and the staff who collect the debts are debt collectors.

Debt management company

A Debt Management Company (DMC) is an organisation that can help you draw up a debt management plan. Usually, you have to pay for this service although there are some DMCs who will do this for free. Instead of dealing with each creditor, you make one payment to the DMC and they divide the payment fairly between all your creditors.

Debt management plan

A debt management plan is an arrangement with your creditors (people you owe money to) to pay back your debts by regular instalments.

Debt Payment Programme

This is an agreement under the Debt Arrangement Scheme that allows someone in debt to pay debts off over an extended period.

Debt Relief Order

This is a court order only in England and Wales.


This is the technical term for a type of court order which a creditor usually has to have before payment of a debt can be enforced (doing diligence).

Deductions from earnings order

If you are behind with payments of child maintenance, the Child Maintenance Service could apply for a deduction from earnings order which allows them to take money from your wages.

Default notice

This is the name of the notice that a creditor has to send you before legal action can be taken if you haven’t paid debts covered under the Consumer Credit Act 1974.


This is the term used to describe a number of legal options for a creditor to use to force you to pay the money you owe.

Direct debit

This is an instruction to your bank or building society that allows an organisation to collect payments from your account. The amount can be changed by the bank at the request of the organisation.

Direct deductions

See Benefits.

Earnings arrestment

When you owe money and are in a job a creditor can seize some of your earnings under an earnings arrestment.

Endowment mortgage

This is a type of interest-only mortgage. Instead of repaying the loan each month, you only pay the interest on the loan to the mortgage lender and take out an endowment policy with an insurance company and get a lump sum at the end of the mortgage period. You pay the endowment policy monthly. You must get financial advice because the lump sum might not be enough to pay the mortgage.


If you have equity in your property, this means that the property is worth more than what you owe on the mortgage or loan.

Equity release schemes

An equity release is a way of raising money from the value of your home without having to move out. The loan is repaid later, usually after you die or move permanently to a care home.

Financial Ombudsman Service

This is an independent organisation that settles complaints between consumers and businesses which provide financial services. It is a non-profit making public body that was set up by the government to meet legal requirements.

Financial Conduct Authority (FCA)

This is one of the agencies which regulates firms in the financial services industry and tries to provide some protection for the consumers in the financial industry. The other agency is the Prudential Regulation Authority.

Financial services compensation scheme

If your bank or building society goes out of business and has no money left to pay you, you may be able to claim compensation from the Financial Services Compensation Scheme (FSCS).

Fixed interest rate

This means the interest rate won't change during a set period of your loan. For example, the interest rate on your mortgage might be fixed for 2 years. 

Gross earnings

This is your earnings before deductions such as tax.


A guarantor agrees to pay a debt if the original borrower doesn't pay. Their own financial situation should be assessed to check they can pay. It's also possible to have a guarantor for a rental agreement. 

More about using a guarantor for rent

Hire purchase

Hire purchase (HP) is a way of borrowing. You hire goods, like a car, and pay for them in instalments. The goods don't belong to you until you've made the final payment.

More about hire purchase

Home purchase plans

See Islamic mortgages.

Identity theft

This is when someone you don't know uses your personal details, PIN number, telephone or internet banking security details. They could use this information to open accounts or take out loans in your name.


This is the term for a process that a creditor can use to prevent someone in debt to them from selling assets.

Initial writ

This is the name of the legal document that starts civil proceedings in the sheriff court under the ordinary cause.


This is a court order only in England and Wales. In Scotland see Interdict.


This is a court order in Scotland that is like an injunction. It stops someone from breaching another person's rights. An interdict can be granted by the Sheriff Court or the Court of Session. 

Insolvency practitioner

Someone appointed to deal with the affairs of a company or an individual when they become insolvent - or goes out of business.

Insolvency Service

This agency provides a range of services under the Insolvency legislation. It does not provide a service for individuals who are sequestrated in Scotland. See Accountant in Bankruptcy.


This is the amount of money you get for keeping your money in, for example, a bank or building society. It is also the cost you pay when you borrow money through a loan or credit agreement.

See also fixed interest rate

Interest-only mortgage

This is a mortgage when your monthly payment only pays the interest charges on your loan - you're not actually reducing the loan itself. This might be an endowment mortgage.

Interest rate

This is the percentage that is paid on savings or loans.


These are financial products which are bought and sold, or traded, on the stockmarket. They include things like stocks, shares, bonds and trusts.


This stands for Individual Savings Account. ISAs are savings and investment plans which allow you to save a certain amount of money each year tax free.

Islamic mortgages

In an Islamic mortgage, also called a home purchase plan, you don't pay interest. Instead, the lender makes a charge for lending you the money to buy your property. The charge can be recovered in different ways, for example, by charging you rent.

Liability order

This is the name of the order that the Child Maintenance Service uses if you are out of work and have arrears of child maintenance to pay.

Loan sharks

See Credit licensing.

Mail order catalogues

This is a way of buying goods by post, with payments being spread over a number of weekly instalments.

Magistrates court

This court only operates in England and Wales. In Scotland see Sheriff Court.


When two or more people decide to open a joint bank account, they have to sign a form called a mandate. The mandate sets out what the joint account holders can do, for example, who can sign cheques and take money out.


This is a loan taken out with a bank or building society to buy a house or other property. The mortgage is usually for a long period, typically up to 25 years, and you pay it back by monthly instalments. If you don’t pay the mortgage you can lose the property because the mortgage is secured on the property.

Mortgage to rent schemes

See Mortgage rescue schemes.

Means enquiry hearing

If you have to pay a court fine but can’t afford it, you might have to go back to court so they can look at your financial circumstances and decide how much you must pay. This is called a means enquiry hearing.

Mortgage payment protection insurance

If you’ve lost your job or had a temporary loss of income, check whether you have mortgage payment protection insurance (MPPI). You may have taken a policy out at the same time as you got your mortgage or afterwards. The MPPI policy may cover your mortgage payments if you can't work because of unemployment or sickness.

Mortgage rescue schemes

These are schemes which can help if you’re struggling to pay your mortgage. There are several different types of mortgage rescue schemes including: schemes run by private firms and individuals, schemes run by social landlords such as local authorities and housing associations and government-backed mortgage rescue schemes.

Net earnings

This is your earnings after deductions such as tax.

Non-secured loans

Money borrowed from a lender which does not use your property (home) as an extra guarantee of repayment. This means your home is not immediately at risk if you fall into arrears, although the lender can take court action to make you pay the money back

Non-priority debts

Debts which are less urgent to pay than priority debts because you can’t lose your home or other possessions because you owe money for them.

Occupational pension

This is a pension scheme set up by employers to provide pensions for their employees. They work in one of two main ways:

  • Final salary scheme (or defined benefit scheme). Your pension is based on your pay at retirement and the number of years you have been in the scheme. In most schemes you pay a set percentage of your wages towards your pension fund and your employer pays the rest

  • Money purchase scheme (or defined contribution scheme). Your pension is based on the amount of money paid in and on how the investments have performed. You'll usually pay a percentage of your wages into the scheme and your employer may also pay a regular amount in but this isn't always the case.


You can ask a bank to agree that you can take more money out of your bank account than what’s in there. This is called an agreed or authorised overdraft. If you go over your agreed limit, the bank may return (bounce) cheques or other payments and you’ll be charged additional fees and interest.


This is someone who lends money according to the value of goods you leave with them (pledge). The pawnbroker must keep the goods for at least six months but you can get them back at any time by paying off the loan plus interest.

Payment protection insurance

When you take out a loan, credit card or store card, you're often asked to take out an insurance policy at the same time. This is called payment protection insurance (PPI). PPI is meant to cover the loan or card repayments if you can’t afford them yourself because of illness or unemployment or because you have an accident or become disabled.


This is an income paid out after you retire. You can’t spend any money in your pension fund until you have reached the minimum age (often 50). You can often take part of the money as a cash lump sum but the rest must be taken as income.

Personal loans

When you take out a personal loan, you normally borrow a fixed amount of money, repayable in monthly instalments over an agreed period of time. This is called the term of the loan. You’ll usually be charged a fixed rate of interest and sometimes extra fees, especially if the loan is secured. Some lenders give loans with a variable interest rate. This means that the interest rate may go up or down during the term of the loan.

Personal pension

A personal pension is a pension plan that is not tied to a particular place of employment. You can make contributions and keep it going even if you change your job.


Personal Identification Number – this is a secret number, which you use with a cash machine card. You type it in and the cash machine checks that the card number matches the PIN that was allocated to you or that you changed to suit yourself.

Priority debts

These are debts which you need to sort out urgently because there may be serious consequences if you don’t pay them, for example, mortgage and rent debts.

Pro-rata offers

This is a special way of working out what to offer to pay when you are in debt and have more than one creditor.

Prudential Regulation Authority

This organisation sits within the Bank of England. It was created when the Financial Services Agency (FSA) split into two. It regulates and supervises banks, building societies, credit unions, insurers and major investment firms. The other agency is called the Financial Conduct Authority (FCA)

Redemption charge

This is a fee you might have to pay your mortgage lender if you switch mortgages or pay off your mortgage early.

Repayment mortgage

This is a mortgage which means that every month your payments to your mortgage lender go towards reducing the money you borrowed (the capital), as well as paying the interest charged on the loan.


See Investments.

Second mortgage

See Secured loan.

Secured loan

This is money borrowed from a lender, using your property as an extra guarantee of repayment. This may be called a second mortgage, second charge or further charge. They all mean the same thing. If the amount isn’t paid in full, the lender may take the property back (repossess it) and sell it.

Shared ownership

If you own your property through a shared ownership scheme, you will usually make a monthly payment towards your mortgage and a rent payment to a landlord. The landlord is often a housing association, or another type of social landlord.

Sheriff Court

This is a court in Scotland that deals with civil and criminal matters with a sheriff on the bench.

Sheriff officers

A sheriff officer is an official of the court who has been instructed by the court to do something - for example deliver important documents by hand, or collect a debt.


A shortfall is the term used to describe the amount of money that is still outstanding on a mortgage or other loan after the property has been sold.

Simple procedure

This is a legal procedure in the sheriff court when one party is claiming less than £5,000 from the other party. Simple procedure replaced small claims and summary cause actions for claims under £5,000

Social fund loans

If you get certain social security benefits you may be entitled to help from the Social Fund for one-off expenses. You have to pay back what you borrow but you don't have to pay any interest.

Standing order

This is a method of paying regular amounts from your bank account to a person or organisation that you owe money to. It is your responsibility to change the payment if it needs to be altered.

State retirement pension

This is a pension paid to you by the government when you reach retirement age.

Store card

This is a plastic card issued by a shop that lets you buy goods at that store on credit. You must either pay the full amount, or a minimum amount back each month.

Student loans

These are low-interest loans for students, authorised by the government through the Student Loans Company (SLC).

Sub-prime lender

This is the jargon term for lenders who are willing to make loans to people who are unable to get credit from mainstream lenders, such as high street banks or building societies, because of a poor credit record.


This is the term for the document that starts civil proceedings in the civil court.

Tax code

This code tells your employer how much tax-free pay to give you during each pay period. Your tax code is worked out from your personal tax allowances and other tax adjustments.

Tax-free interest

Interest on savings is usually taxed but some people don’t have to pay tax. If you are one of them, you should ask your bank or building society for form R85, which you can fill in and return to your branch. This avoids the need to pay tax on your savings.

Tracker interest rate

This interest rate follows a fixed economic indicator, which is usually the Bank of England's official borrowing rate, or 'base rate'. Your repayments will go up or down if the base rate goes up or down. Some lenders offer tracker mortgages, for example. 

Trading cheques and vouchers

These are schemes offered by doorstep lenders. They can be exchanged for goods, usually clothing and soft furnishings and usually at specific shops. You repay the amount to a company agent who normally calls at your home. Interest rates are often high for this type of credit.

Trust Deed or Protected Trust Deed

This is a legally binding agreement between you and your creditors. Your assets and property are passed to a trustee who will manage your financial affairs with the aim of paying your creditors as much as possible of the debt owed to them.

Unauthorised transactions

This is money going out of, or into your account, that you didn't know about and haven't allowed. An example is something that has been paid for with your credit card that you didn't know about, and you had not given your permission for.

Unsecured creditor

This is a creditor who does not hold any security (for example, like a mortgage) for money owed. The debt is not ‘secured’ on anything that can be sold or seized to sell.

Variable interest

If you have a mortgage or other type of loan with variable interest, repayments will go up if interest rates go up. If interest rates fall, not all lenders drop their rates but might do.


This is the technical term for taking money out of your bank or building society account.

Writing off a debt

If you have no money to spare to pay off your debts, your creditors (the people you owe money to) may agree to write off your debt. This means they agree to stop taking action against you to get their money back.