Savings Jargon Buster

The financial world is full of terms, definitions and acronyms that you may find unfamiliar and difficult to understand.

Please click on a term below to reveal a simple explanation of each term:

• Annual Equivalent Rate (AER)
  • This illustrates what the interest rate would be if interest was paid and added to the account each year. This allows you to compare various products with each other.
• Annual interest
  • An account in which your interest is paid once per year, usually at the end of the Society’s financial year (30 November).
• Bankers Automated Clearing System (BACS)
  • An electronic transfer system which allows you to make transfers into your account from accounts held elsewhere within three days.
• Bank of England Base Rate
  • The rate of interest set by the Bank of England, which is reviewed each month by the Monetary Policy Committee.
• Capital
  • The original investment you make, for example into a bond. This will then attract interest for the life of the investment.
• Capitalised interest
  • The interest your money has earned, which is added to your original investment.
• Clearing House Automated Payment System (CHAPS)
  • An electronic transfer system which allows you to make deposits into your investment accounts with same day clearance.
• Deposit account
  • An account which does not give you membership rights to the Society.
• Easy access account
  • An account which allows you to withdraw your money without incurring charges.
• Financial Services Authority
  • Independent non-governmental body, given statutory powers by the Financial Services and Markets Act 2000, that sets standards for all financial institutions to adhere to.
• Financial Services Compensation Scheme
  • The Financial Services Compensation Scheme was established under the Financial Services and Markets Act 2000. Its purpose is to protect your savings, up to certain limits, currently £50,000, in the unlikely event that the Society became unable to repay it.Full details of the Financial Services Compensation Scheme can be found on the Important Information page within the Savings section of this website.
• Form R85
  • HM Revenue & Customs form that non tax-payers complete in order to have their interest paid without any deduction of tax.
• Gross interest
  • Interest paid without any deduction of tax.
• Individual Savings Account (ISA)
  • A tax-free savings account, launched on 6th April 1999. All individuals can receive gross interest on limited amounts of their savings each year through ISA accounts.
• Maturity
  • The day when an investment placed in a fixed term account reaches the end of its term.
• Monetary Policy Committee
  • The committee that determines the Bank of England Base Rate each month.
• Monthly interest
  • An account in which your interest is paid at the end of each calendar month.
• Net interest
  • The interest paid on your investment once tax has been deducted.
• Passbook
  • A small booklet which details all deposits and withdrawals made on your account, along with the balance, which must be presented whenever you wish to make a withdrawal from your account.
• Share account
  • An account which gives you membership rights to the Society.
• Statement of Deduction of Tax
  • Shows the amount of interest your savings account has earned and the amount of tax you have paid in a tax year. The Society can provide you with this on request.
• Year end
  • The end of the accounting year, when interest is paid on annual interest accounts. This is 30 November for all annual accounts except ISAs, for which the year end is 5 April.