A Plain English Guide To Financial Terms

A Plain English Guide
to Financial Terms
Financial
Literacy
=
(01) 855 4332
Programme
A NALA/EBS Partnership + literacy@nala.ie www.nala.ie
www.nala.ie
Published by
National Adult Literacy Agency

76 Lower Gardiner Street
Dublin 1
© 2004 National Adult Literacy Agency
The copyright in this guide belongs to the

National Adult Literacy Agency.
ISBN 1-871737-37-0
The views expressed in this publication are not necessarily the views of the
National Adult Literacy Agency.
Disclaimer: Please note that these descriptions are a guide only and are not
legal definitions.
Words marked with * are related to social welfare payments and benefits and
have been described only in general terms. For detailed explanations, please
contact the Department of Social and Family Affairs.
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A Plain English Guide

to Financial Terms
2004
Foreword
EBS has joined with the National Adult Literacy Agency (NALA) to
develop and implement a three-year Financial Literacy Programme.
Through this programme we plan to work together to help tackle the
issue of financial literacy as a barrier to accessing financial services.
With over 50% of Irish adults having less than the desirable level of skills
required to function effectively in today’s society, ensuring access to and
understanding of information presents a huge challenge for all of us in the
financial services industry.
This Plain English Guide to Financial Terms is an important resource that will
help to create a much greater understanding of the dense and obscure jargon
which is used on a daily basis in relation to all aspects of the money business.
This resource will also give guidance to management and staff who work in the
financial services sector, money advisers, the Government, regulators and utility
companies in explaining phrases used by them. Although it comprises over 30
pages with over 450 definitions it is not a complete dictionary of financial
services and money-related phrases in use in Ireland. We intend that this should
be an evolving publication and we welcome your feedback and contribution to
its further development.
The explanations are designed to help explain ideas and concepts rather than
to give legal definitions. Used effectively we hope that this guide will help to
promote financial inclusion and empower people to make informed and
relevant financial decisions.
2
EBS Building Society and the National Adult Literacy Agency (NALA) would
like to thank the following for their assistance in the production of the Plain
English Guide:
• The Basic Skills Agency in the UK for providing the bulk of the initial
information from their ‘Financial Literacy Glossary’; and
• the Irish Financial Services Regulatory Authority for their ‘Glossary of
Financial Terms’.
Financial decisions are among the most important that are made by people
during their lifetime and it is our collective responsibility to provide better tools
to assist people in making those decisions.
Ted McGovern
Chief Executive,
EBS Building Society
NALA compiled this publication and provided plain English editing for it. Additional terms and
explanations were also derived from Inside Track, the EBS online resource that helps share
financial understanding with consumers (www.ebs.ie/insidetrack).
We aim to update this guide to ensure that it maintains its relevance. We invite your suggestions
for additions. Please e-mail suggestions to literacy@nala.ie.
3
Aa accidental damage
Accidental damage AVC

Damage to a person’s possessions by Additional Voluntary Contribution –
accident, such as spilling paint on a extra money that people in
carpet, which is covered by some occupational pension schemes can
home insurance policies pay to increase their pension benefits
Account Affinity card

A record of spending and income, A credit card that allows a person to
provided by a bank, post office or support an organisation such as a
building society charity; every time a person uses the
card to buy something, the credit
Accounting date card company makes a small
The last date of the period covered by donation to the organisation
an organisation’s annual accounts
After tax
Accumulation date An amount of money that a person is
The date when income is reinvested in left with after they have paid tax
a unit trust, instead of being paid out
to investors Agent
A person who deals with a range of
Accumulation unit suppliers from which it can issue a
A type of unit of income that a recommendation to a client
company reinvests in a unit trust
instead of paying it out immediately All risks
to investors A home insurance policy that covers
a person’s possessions even if they
Accurate figure take them outside their home
An exact reading from a meter to
record how much gas or electricity a Allocation rate
person has used A percentage of a person’s money
that has been invested in a fund; the
Actuary remainder is spent on charges
An expert on pension scheme assets
and debts, life expectancy and the Annual
risk for insurance purposes Every year
4
annual cover Aa
Annual cover ARF
An insurance policy that a person Approved Retirement Fund – an
must renew every year, such as health investment plan that self-employed
or car insurance people, directors of family firms and
certain other people can buy with the
Annual management charge proceeds of their pension plan when
A charge or fee that a person must they retire, which they can allow to
pay each year to the manager of an grow or can cash in from time to time
insurance policy, investment or to provide an income
pension fund, based on the value of a
person’s fund Arrangement fee
A fee that a bank or building society
Annual service charges a customer for arranging a
A check made once a year on a loan
piece of equipment to make sure it is
working properly Arrears
Money a person owes after it is due
Annuity
A regular amount paid out to Articles of association
somebody from an investment that is A company’s document that sets out
linked to a managed fund the shareholders’ rights and the
directors’ powers
Applicant
A person who applies for something Asset
Something owned
APR
Annual Percentage Rate – a Asset management
percentage to show the amount of A service from a financial advisor to
interest and other fees a person pays spread a person’s investment between
each year to receive a loan a number of assets, such as shares,
Government bonds, cash and
property, so that they can potentially
earn more money
5
Aa asset management
Asset management
Insurance cover for an event that will Bb
definitely happen, such as death, Balance
rather than an event that might An amount of money, shown on a
happen, such as fire or theft person’s statement, that they have in
their account or that they owe at
Audit any time
An independent examination of an
organisation’s records and accounts Balance brought forward
to make sure that they show a fair, An amount shown on a person’s last
accurate and legal reflection of the statement that is brought forward to
financial position of the company at the next statement, either to show
the accounting date money saved or money owed
Auditor’s report Balance transfer

A report by an independent person An amount a person owes on one
or firm on an organisation’s credit or store card that they can
financial records switch to another credit card
Authorised share capital Balance sheet

The highest amount of share capital A summary of a company’s assets
that a company can issue, as set (what a company owns) and
out by the company’s memorandum liabilities (debts a company owes)
of association at a point in time
Available credit Balloon payment

The difference between a person’s A higher than normal final payment
credit limit and the amount of money for a loan in return for lower regular
they have already borrowed or spent repayments
on their credit card
Bankrupt
A situation of not having enough
money to pay debts, declared by a
court order
6
bankruptcy Bb
Bankruptcy Benefit statement
A type of order issued by a court A statement, usually issued once a
when a person cannot pay their debts year, of the value of a person’s
when they are due, which allows the occupational pension
person’s property to be sold to raise
money to pay their creditors Benefit-in-kind
A ‘perk’ of a job, such as a company
Barter car, gym membership or health
A way of paying for things by insurance, that a company gives to its
exchanging goods and services employees or directors and that may
instead of money be subject to tax
Basic bank account Bid/offer spread

A service from a bank or building An initial investment charge that refers
society that only lets a person spend to the difference between the buying
what they have in their account so and selling price of a unit on the
there is no risk of becoming overdrawn stock market on any given day
and running up overdraft charges
Bid price
Bear The price that an investor in a unit
Someone who sells shares now, trust can get for each unit if they cash
expecting the share price to fall in the them in
future so they can buy the shares
back later at a lower price Bond
A written promise made by
Benefactor governments and companies to repay
A person who gives a gift, for any money borrowed, with interest,
example in a will on a certain date in the future
Beneficiary Bonus issue

A person who receives a gift An offer of free shares to a company’s
shareholders, related to the number of
shares they already have
7
Bb book value
Book value Broker – Insurance

The value of a fixed asset, such A self-employed person who can offer
as a building or machine, after their client the policies of five or more
depreciation, as recorded in an insurance companies
organisation’s accounts
Broker Mortgages
Books of account A self-employed person who can offer
Books that a business must keep to their client the lending products of five
record its financial transactions or more lending institutions
accurately
Brokerage
Booking fee Commisson earned by a broker or a
An amount a person pays to book broker’s business
something, for example a concert or
plane ticket, to cover a company’s Budget
administrative costs A plan of spending over a certain
length of time, based on how much
Borrow money a person has
Get money that will be paid back
Building society
Bounced cheque An organisation owned by its
A cheque that the bank refuses to pay members, who are some or all of the
out because the person who wrote the customers saving with or borrowing
cheque does not have enough money from the society
in their account to pay for it
Buildings insurance
Breach of contract An insurance policy that pays out if a
An act that breaks a legal duty person’s home is damaged, for example
agreed in a contract if tiles fall off a roof during a storm
Bridging loan Bull

A loan given by a lending institution Someone who buys shares now,
to ‘bridge’ a time difference between expecting that their value will rise in
buying a new home and selling the the future so that they can sell the
existing home shares for a profit at a later date
8
calendar month Cc
Bureau de change Capital gain
A place that changes all major Money a business or person makes if it
foreign currencies, in cash or in sells a long-term asset, such as a
traveller’s cheques, for a fee known building, for more than it cost
as a commission
Capital gains tax
A tax on gifts over a certain value or
on a capital gain.
Cc
Calendar month Capital guarantee
A period of time that starts on the first An investment that guarantees that,
day of the month and ends on the last at the end of the agreed term, a
day, as opposed to starting in the person will get back at least the
middle of one month and ending in amount they invested
the middle of the next
Capped charge
Cancellation rights The most that a pension provider can
A person’s or company’s right to charge a person for managing their
cancel a contract pension, usually a percentage of the
value of a person’s fund
Capital
An amount of money a person Car insurance
saves, invests or borrows, before Insurance that a person needs before
interest or loss driving a vehicle, which, depending
on the type of insurance, pays them a
Capital charge certain amount if their car is stolen and
A charge that a unit trust manager pays a sum towards repairs if the car
takes out of the fund’s capital rather is damaged due to an accident or fire
than out of the income it has generated
Cash advance
Capital expenditure A cash withdrawal using a credit
Money a business spends on buying card, for which a person may pay a
or improving its fixed assets, such as fee as well as interest
equipment or furniture
9
Cc cashback
Cashback Certificate of insurance

A service with a debit card that A document that proves that a person
allows a person to get money straight is insured
from their account when a shop
assistant swipes their card to pay for Charges
goods and services Fees and interest that a person must
pay, for example when they borrow
Cashcard money or buy on credit
Also known as an ATM card – a card
that a person can use only at cash Charge card
machines with a personal A type of credit card often issued by a
identification number (PIN) to store to its customers so that they can
withdraw cash, check their balance buy goods from the store on credit
or print out a mini-statement
Chargeable asset
Cash inflow An asset on which a person may
The amount of money coming into a need to pay capital gains tax if they
business sell or dispose of it
Cash outflow Cheque

The amount of money leaving a A written order, addressed to a
business bank, instructing the bank to pay an
amount of money to the person or
Cashflow organisation named on the cheque
A record of all the money coming in
minus all the payments as they are Cheque guarantee card
made, measured over a particular time A plastic card from a bank or
building society that guarantees that
Caveat emptor the amount of money on a cheque
A Latin term, ‘buyer beware’, to warn (up to a certain limit) will be paid
people to understand the meaning of whether or not there is enough
a sales contract before agreeing to it money in the account
10
child dependant Cc
*Child dependant Commission
A child up to age 18 who normally A small fee charged as a percentage
lives with and is being supported by of the value of goods or services for
a person or a child up to the age of example, for foreign exchange
22 who is in full-time education by
day at a recognised school, college Company pension scheme
or university Like an occupational pension scheme,
a pension scheme organised by a
*Child Dependant Increase (CDI) company to provide pension benefits
An additional amount paid to a for its employees
person receiving certain social
welfare payments to cover the cost Compensation
of supporting a child dependant An amount of money paid to make up
for an injury, damage or loss
Cirrus
A brand of an international debit card Compound annual return (CAR)
network, run by the MasterCard The interest rate if interest on savings
organisation, that lets a person access is added to savings and paid at the
their money at ATM machines abroad end of each year
Claim Comprehensive motor

An action to get compensation based insurance
on an existing insurance policy Motor insurance that covers a person
for damage to their car, resulting from
Clearing any accidents, theft and fire
The time it takes for a bank or
building society to transfer money Consumer
from one account to another, say A person who buys a good or service
when a person lodges a cheque
Contents insurance
Collateral Insurance that covers damage to and
An asset offered to or needed by a theft of a person’s possessions in
lender as security for a loan, such as their home
a house for a mortgage
11
Cc contract
Contract Cooling-off period

An agreement between two or more A period after a person signs a
parties, which is usually written and is contract, but before the contract
binding on everyone concerned becomes binding, in which the person
can change their mind about the
Contract of service contract without any penalty
A contract usually agreed between an
employee and their employer Counterfeit
Something that a person forges or
Contract for service copies with the aim of deceiving
A contract usually agreed between an another person
organisation and another organisation
or self-employed person, such as a Coupon
consultant or a contractor A piece of paper that allows a person
to get a product for a lower price up
*Contributory payment to a certain date
Known as social insurance, a social
welfare payment that depends on the Cover
number of pay-related social The protection offered by an
insurance (PRSI) contributions a insurance policy, involving payment
person has made in a certain period; for any event or accident in relation
examples include Unemployment to a person’s home, car or health,
Benefit and Maternity Benefit for example
Conversion rate Credit

Also known as the exchange rate – a Money that a bank, building society
changing rate at which a person can or a credit card company has lent a
change one currency for another, for person to buy goods or services
example €1 for $1.20
Credit agreement
Conveyance A document that records the conditions
A legal term to describe selling or on which a person receives credit
giving property to another person
or group
12
credit card Cc
Credit card Credit reference agency
A card that lets a person buy something An organisation holding information
‘on credit’ and pay for it later on a person and their past record of
paying back their debts, to which
Credit card bill lenders may refer before they agree
A detailed statement each month of to give a loan
what a person has bought with their
credit card and how much they Credit risk
need to pay back to their credit The risk that a person might not repay
card company a loan or credit
Credit history Credit scoring

A history of how well a person has A system used by a lender to give
been able to repay debt; a poor a score to a potential borrower
credit history means that they may depending on the answers they give
find it difficult to take out a loan to a series of questions; the higher the
score the lower the risk that the
Credit limit person will not repay their loan
The highest amount a store card or
credit card company will lend a Credit transfer
person at any time A way of automatically moving money
from one bank account to another
Credit outstanding
The amount of credit a person has not Credit union
yet paid back A non-profit organisation that makes
loans to its members and encourages
Credit rating savings
A score of a person’s ability to repay
debt such as loans and credit card bills Credited
A term to describe a person’s account
when money has been paid into it
Creditor
A person or company who is owed
money
13
Cc credits
*Credits Current liabilities

PRSI contributions that are recorded Short-term debts that a business must
for a person when they are absent pay within a year, such as bank
from work due to illness and cannot overdrafts, money owed to suppliers
pay their own PRSI; they help keep a and employees’ income tax
person’s social insurance record up-to-
date to help them get social welfare
payments and benefits in the future
Dd
Critical illness insurance Data Protection Act
Insurance that pays a lump sum, A law that protects a person’s personal
covers a person’s mortgage or makes information and prevents companies
regular payments if a person cannot from sharing it with other companies
work due to a serious illness without the person’s knowledge
Currency Debenture
The type of money used in a A document issued by a company,
particular country, for example the usually to a bank or building society,
euro or the dollar that acknowledges that some or all of
the company’s assets are security for
Current account a debt
A bank or building society account
that lets a person keep their money Debit
secure, but still write cheques and use A payment from an account or the
an ATM card to get money cost of buying goods or services
Current assets Debited

Short-term assets, such as bank The result of money being taken out
balances and stocks, that constantly from an account
change in value
14
debit card Dd
Debit card Defined contribution pension
A card that lets a person pay for scheme
goods and ser vices and get A type of pension scheme to which a
money straight from their bank person makes payments each month
when a shop assistant swipes the and that pays out an amount related
card through a machine to how much the person has invested
and how well the fund has performed
Debt
Money owed to another person or to Delete as applicable
a company Cross out anything that does not apply
Debt consolidation Dependant

Taking out a single loan to pay off a Somebody who depends on another
number of smaller, individual loans person for financial support, such as
a child or an elderly relative
Debtor
A person who owes money Deposit
Initial amount of money that a person
Declining term policy pays to get something, for example a
A policy that protects a person’s house or an electrical appliance
mortgage payments and ends as soon bought through hire purchase
as they have paid off their mortgage
Deposit account
Deeds A type of savings account which pays
Documents that confirm that a person interest without an ATM card or a
owns a particular property, usually cheque book
given as security for mortgages
Deposit Interest Retention Tax
Default (DIRT)
A failure to pay a debt on time A tax paid by a bank or building
society on the interest a person gets
from saving. The bank deducts it from
the interest earned on behalf of the
customer
15
Dd deposit rate
Deposit rate Discounted rate mortgage

The rate of interest that customers can A type of mortgage, usually offered to
earn on money they keep in a bank new customers, in which the interest
or building society deposit account rate is reduced for a fixed period of
time
Depreciation
The drop in value of an asset due to Disposable income
wear and tear, age and whether it is Income available after a person
going out of date, as recorded in an pays tax, loans and buys basic
organisation’s financial records goods and services
Direct debit Dividend

A method of paying bills regularly, by Money that a company pays to its
giving permission to a company or shareholders from its profits
organisation to take money straight
from a bank or building society Dormant account
account on a date specified by the An account that is no longer used
company or organisation
Drawee
*Direct payment In the case of a cheque, the bank
A secure and confidential method of that will pay the amount written on
lodging payment (for example a the cheque
social welfare payment) directly into a
person’s bank or building society Drawer
account or to a savings’ account with The person or organisation that has
another financial institution, using written a cheque
electronic fund transfer (EFT)
Duress
Discount A threat or pressure put on somebody
Money that is taken off the price of to do something
something
Duty
A tax charged by the Government
16
книга выложена группой vk.com/translators_page
electronic banking Ee
Ee Estimate
A guide to the cost of a good or
Electronic banking service, such as electricity
A term describing different ways to
manage money without talking to a Ethical investment
person, for example by using an ATM An investment in desirable
card, the Internet and the telephone activities, such as those that might
benefit the environment or help
Endorsement disadvantaged communities
Writing on a document, for example
the signature on a cheque Ethical investment policy
A plan to make sure that money is
Endowment invested in desirable activities
A transfer or money or property to a
charity for a specific purpose Euro
Official currency of Austria,
Endowment policy Belgium, Finland, France, Germany,
A savings plan that pays out a Greece, Ireland, Italy, Luxembourg,
lump sum on a certain date in Netherlands, Portugal and Spain (as
the future or when a person dies, at September 2004)
whichever happens sooner, and is
usually used to pay off a large loan, Excess
such as a mortgage A sum of money, usually advertised by
an insurance company, that an
Equity insured person must pay for any loss,
The difference between the value of a damage or injury before an insurance
person’s property and the amount of company will make any payments
mortgage they still have to pay
Exchange rate
Estate A changing rate at which a person
A person’s assets, including money, can change one country’s currency for
when they die another’s, for example €1 for $1.20
17
Ee exclusion
Exclusion
An item, event or health condition, for Ff
example, that is not covered by an Fee
insurance policy A sum of money a person pays for a
service, such as getting a loan or
Executor taking out an insurance policy
A person who carries out the
instructions in a will Final demand
The last demand for payment before
Exempt a company cuts off a service or
Free from a duty or condition begins legal action
Exit charge Final dividend

A charge that a person pays if they The amount of payment to
cash in an investment before its end shareholders declared by directors of
date or before it matures a company when the company has
drafted its annual accounts
Expenditure
Money that a person spends Finance company
A company, used by most shops, that
Expiry date makes money by lending to people
The last date a person can use who want to buy goods on credit
something, such as a credit card
Financial advisor
Somebody who studies a person’s
earnings, savings and spending and
gives advice on how to manage or
invest their money
Financial situation
A term to describe a person’s
income and spending, including any
loans and any savings they have for
the future
18
financial statement Ff
Financial statement Floating charge
A company’s statement that includes A security created by a company
the annual accounts, directors’ report over its changing assets, such as
and so on stock and unpaid sums from debtors,
in return for a loan; if the company
Financial year does not make the repayments when
The year covered by a set of annual they are due, the assets are used to
financial statements pay it
Fiscal Floating exchange rates

Term to describe finances controlled Exchange rates between currencies
by the Government that go up and down in line with
supply and demand
Fixed asset
An asset that a business intends Forfeit
to use for several years, such as Lose a property or right for doing
buildings and equipment something wrong, such as not
repaying a loan on time
Fixed interest rate
An interest rate that stays the same
for a fixed time, no matter how other
interest rates may go up or down
Fixed-rate mortgage
A type of mortgage for which a
person pays a set amount of interest,
so no matter how interest rates go up
or down, the same monthly repayment
is made
Fixed-interest bond
A type of investment that pays a set
amount of money, no matter how
interest rates go up or down
19
Gg GDP
GDP Guaranteed interest rate

Gross domestic product – the value of An interest rate that a person can
all goods and services produced and be sure they will receive on
sold inside one country particular savings
Goodwill Guarantor
An intangible business asset A person who agrees to pay the loan
based on a company’s reputation if the person who received the loan
from the confidence of repeat fails to pay
customers and connections
GNP
Gross national product – the value of Hh
goods and services produced by a Hire purchase
country, including those sold abroad A way to buy goods that involves
getting them straight away but
Gross making regular payments for them
The total amount, before fees or taxes over a fixed period of time
are taken off
Home insurance
Gross interest A type of insurance that covers either
The total interest on savings before the property or its contents from theft,
any tax is taken off fire, flooding or other damage
Gross pay Honouring a cheque

Total pay before income tax, PRSI or Paying out the amount stated on a
pension payments are taken off cheque, as long as there is enough
money to cover it in a person’s account
Gross profit
Total profit made from selling goods Honouring an agreement
and services after the cost of Sticking to both sides of an agreement
producing them
20
identity Ii
Ii Income tax
A tax on personal or business income
Identity
Who a person is, shown by Indemnify
documents such as their passport, Protect or insure somebody against
driving licence or birth certificate being sued for their actions
Illustrations Indemnity bond

In financial terms, an estimate of the Insurance requested by a mortgage
value of a person’s savings and lender if a person doesn’t pay their
investments at some point in the mortgage on time, to cover the
future, based on certain conditions difference between what the person
owes and what their house is worth
*Increase for a Qualified Adult
(IQA) Independent agent
An additional amount paid to a Somebody who deals with the widest
person receiving certain social possible range of suppliers from
welfare payments to cover the cost of which it can make recommendations
supporting a qualified adult to a client
Indemnity Independent financial advisor

A promise to compensate someone Somebody who advises on life
else for loss or damage or protection insurance, pensions and investments
from legal responsibility from a who is not employed by a company
person’s actions selling such services
In credit Indexation
A situation where money is available A way of changing the value of
in an account savings and the cost of goods and
services to allow for the effects of
Income inflation
Money coming in, such as wages and
social welfare payments
21
Ii index linking
Index-linking Insurance policy

Linking the value of a financial A document of the contract made by
product, such as a pension, to the an insurance company with a person
Consumer Price Index so that the value whose property or health is insured
of the fund keeps up with inflation
Insurance premium
Inflation Money a person pays regularly to an
An increase in prices, which decreases insurance company to make sure they
the purchasing power of money are covered
Insolvent Insurance quotation

A person’s or organisation’s position The price given by an insurance
when they cannot pay debts when company for protecting against
they are due for repayment particular loss or damage
Instalment Intangible assets

A regular repayment for goods bought Assets that cannot be touched, such
on credit or to pay back a loan as goodwill and patent rights
Instant access Interest

Ability to get money straightaway A fee a person receives if they save
without having to give notice to a money, or pay if they borrow money,
bank or building society usually expressed as a percentage of
the savings or the loan
Insurance
A contract between a person and Interest rate
a company to buy a plan that The percentage that a person receives
covers them against loss or damage, on their savings or pays on their loan
for example to a car, a home or
their health Interest-free credit
A loan, whether from a lending
Insurance cover agency or a credit card company, on
Protection against certain events as which a person pays no interest for a
outlined in an insurance contract fixed period
22
joint account Jj
Interest-only mortgage Issued share capital
A mortgage where a person only Shares that a company has given to
pays back the interest to the bank or its shareholders, which equal some of
building society for a period of time the value of the company
Interim dividend
A dividend that is paid to shareholders
during the financial year, depending Jj
on the company’s profits Joint account
A bank account held by more than
Intermediary one person, usually by a married
Someone who links potential clients to couple or by partners who live at the
financial services providers to advise same address
them about their insurance needs and
help them to choose the most
appropriate policy
Ll
Investment broker Land Registry
Somebody who acts as the link A central list of the owners of land
between a person and an investment and buildings
company and advises them how to
invest their money and where Laser card
A type of debit card, issued by
Investment portfolio several Irish financial institutions
A collection of a person’s savings, such
as shares, bonds, property and cash Legacy
Money or property left in a will
Investment trust
A company that is quoted on the Legal action
stock exchange and invests in An action that can involve solicitors
other companies and possibly court proceedings to
make sure a person upholds a
contract or to punish them if they don’t
23
Ll legal status
Legal status Loan shark

A reference to whether a person is A person who lends money and
an Irish citizen or has a right to work charges a very high rate of interest and
in Ireland does not hold a licence to lend money
Liabilities Loan-to-value (LTV)

Debts that a person or organisation A percentage that represents the
owes amount of a loan compared to the
value of a house
Lien
A right to keep something owned by Loading
someone who owes a debt, until the A charge that is added to the cost of
person has repaid the debt insurance because of a specific
factor, such as the age of a driver or
Life insurance whether a person is a smoker
Insurance that pays out a lump sum to
a person’s family if they die, usually Lodgement slip
taken out when a person obtains a A form that a person must fill in when
mortgage so that the remaining they pay money into their account,
mortgage repayments are covered whether by cash or cheque
Limited company Loyalty card

A company that limits how much its A card offered by supermarkets, shops
shareholders will have to pay if the and cafes to encourage people to
company is wound up shop there, by offering ‘points’ with
each purchase or free goods after
Limited liability spending a certain amount of money
A statement of the limit on how much
a company’s shareholders would Lump sum
have to pay if the company was A once-off payment that a person
wound up may receive from an investment, such
as a pension, or from an insurance
Loan agreement policy, for example if they have a
A document that describes the serious accident and cannot work
conditions of a person’s loan
24
managed fund Mm
Mm Maximum withdrawal
A limit on the amount of money a
Managed fund person can withdraw from an ATM
A fund made up of investments in machine each day, depending on the
shares, bonds or cash from which amount of money in their account
investors receive ‘units’ related to their
investment *Means
Any income or property (besides a
Management expenses family home) or other asset that could
Internal expenses of an insurer to bring in money or provide an income
obtain and service insurance business,
usually partly passed to a policyholder *Means test
A way of working out the value of a
Mandate person’s means by reference to the
An instruction by a customer to a value of their investments and
bank to operate the customer’s property and to any money in a
account a certain way savings account or current account
and any cash-in-hand
Market capitalisation
The value of a company when the Memorandum
number of its issued ordinary shares A document containing details of a
is multiplied by their market price company’s name, purposes, share
capital and how much the shareholders
MasterCard would need to pay if the company is
An international card payments wound up
organisation owned by banks
worldwide, which provides credit cards Minimum payment
The lowest amount that a credit or
Maturity store card company will allow a
A situation that arises when an person to repay each month to clear
investment, such as a term deposit, or a their debt
life insurance policy comes to an end
25
Mm monthly instalment
Monthly instalment Mutual organisation

A payment each month, usually to A membership organisation, such as a
pay back a loan building society, that is owned by its
depositors and loan account holders
Mortgage
A loan to buy a property; if it is not
paid back, the lending agency can
take over the property Nn
Negative equity
Mortgage adviser A situation where the amount that a
A person who advises others on the person owes on their mortgage is
best type of mortgage to choose higher than the value of their property
Mortgage broker Negotiable instrument

Somebody who assesses a person’s A document that a person signs
mortgage needs, then finds and to give an instruction to pay an
advises on a suitable mortgage lender amount of money to another
person or organisation
Mortgage arrears
Mortgage payments that a person Net
owes after they are due An amount that is left after other
amounts have been deducted
Mortgage repayment
A monthly payment to repay a loan Net book value
for a property The value of an asset, as recorded
in the books of account, after
Mortgage statement depreciation for wear and tear
A report that details payments,
charges and the remaining balance Net income
of a mortgage A person’s income each week,
month or year after tax, PRSI,
Multi-trip cover union subscriptions or pensions
A type of travel insurance that covers have been deducted
a number of trips abroad during a
certain period, usually a year
26
occupation Oo
Net interest Non-profit making body
Interest from which tax has already An organisation, usually a charity or
been deducted public sector agency, that does not
set out to make a profit
Net of tax
An amount left after tax has been Notice
deducted A period of time between a person
telling a bank or building society that
Net profit they would like to take out money
The amount of money belonging to a and being able to take it out
company after deducting operating
costs such as salaries, rent and
electricity bills
Oo
No claims bonus Occupation
A reduction in an insurance premium, A person’s job, work or profession,
usually expressed as a percentage of such as a bricklayer, checkout
the total premium, that occurs if a operator or teacher
person doesn’t claim on their insurance
policy over a period of time Offer price
The price a person pays for each unit
*Non-contributory payment when investing in unit trusts
Known as social assistance, a social
welfare payment that is based on a Official use only
person’s means, verified during a Parts of a form that a person applying
means test; examples include for something need not fill in
Unemployment Assistance and
One-Parent Family Payment Ombudsman
A person who provides a free
Non-priority debt and independent service for resolving
A less important debt, for which a disputes with financial services
lender may take a person to court to companies
get reasonable repayments but cannot
take other action such as cutting off a
service or taking over their home
27
Oo open driving
‘Open driving’
Motor insurance that allows anybody Pp
over a certain age to drive a P45
person’s car A document that an employee
receives when they leave a job,
Operating profit showing their total pay up to the date
The profit from a company’s main they leave as well as the tax and PRSI
trading activity that their employer has deducted
Outstanding instalment P60

A repayment that has not yet been A document that an employee
made receives at the end of every year,
which shows their salary for the past
Overdraft year and the tax and PRSI that their
A facility from a bank or building employer has deducted; needed if a
society that lets a person access more person wants to apply for certain
money than they have in their social welfare payments
account, for a charge
Paid-up share capital
Overdue The money that shareholders have
Something that a person does not pay paid for the shares a company has
when it is due or something that should given them
have occurred earlier but has not
PAYE
Overheads Pay As You Earn – tax paid when an
The costs of running a business, such employer deducts tax from their
as rent, heat and light, advertising employee every time they pay them
and salaries
Payee
The person who receives a payment
28
payment countermanded Pp
Payment countermanded Pension
A statement written by a bank on a An income a person receives from the
cheque before it returns it if the State or a private company, or both,
bank’s customer asks the bank not after they retire; if a person has their
to pay the cheque own private pension, they cannot use
any of their pension fund until they
Payment protection plan (policy) reach a minimum age, usually 50
A plan that makes loan repayments
if a person’s income drops because of Pension calculation table
unemployment or sickness A table that shows the level of
pension a person can expect when
Payment received they retire
A sum of money that a credit card
company or lending agency has Pension contribution
received, which is shown on a A payment, usually every month
person’s statement or every three months, into a
pension scheme
Penalty
A punishment for not obeying a law Pension benefits
or rule or not sticking to the terms of Payments and lump sums that a person
a contract; might involve extra receives from their private pension
charges or interest
Pensionable age
Penalty-free transfer The age a person must reach to be
An option to transfer savings, such as entitled to claim their state pension
a pension, to another scheme or
different provider without having to Pension deduction
pay any charges An amount that an employer takes
straight from an employee’s pay and
uses to pay into a pension plan,
shown on an employee’s pay slip
29
Pp pension fund
Pension fund PIN

A fund to pay employees’ pensions Personal Identification Number – a
four-digit number that a person must
Pension mortgage keep secret and use to get money with
A mortgage that will be repaid out of an ATM card at an ATM machine
the lump sum from a pension
Policy
Pension provider A plan, for savings or insurance, for
A company that provides pensions which a person usually receives a
written document
Per annum
Each year Post-dated cheque
A cheque on which a future date is
Personal allowance written; the cheque can only be
The amount of income on which a cashed on or after this date
person does not pay tax, depending
on their age and whether they are PPS Number
married or have children Personal Public Service Number – a
unique reference number for each
Personal loan person in the State that identifies
A loan taken out by a person to pay the person for all matters related to
for anything they want tax, social insurance and social
welfare benefits
Personal pension
A pension plan, not tied to a particular Premium
employment, that a person can keep Like a payment, an amount that
going even if they change job person must pay regularly for
insurance or pension
Pet insurance
An insurance policy that covers the
cost of vets’ bills
30
priority debt Pp
Priority debt PRSA
A debt that is more important than Personal Retirement Savings Account –
others, such as a mortgage or an a savings account that a person pays
overdue electricity bill, that entitles into each month straight from their
certain lenders and companies to take salary to build up their pension; if an
serious action if the debt is not paid on employer does not already offer an
time, for example, taking over the occupational pension, they must allow
property or cutting off the service their employees set up their own PRSA
Probate PRSI
A legal process that involves Pay Related Social Insurance – a
managing and distributing the estate payment from employers and most
of a deceased person, as left in a will employees, depending on their
earnings and type of work, that
Profit and loss account pays for certain social welfare
An account that shows the money a payments and benefits
business has earned from selling
goods and services after it has paid Public liability
its own expenses A type of insurance cover to protect
people and businesses from claims
Profit and loss statement made by members of the public
A statement of how much money a
business makes and how much it Public limited company (plc)
might lose over a fixed period A company, quoted on the stock
market, whose shareholders only
Promissory note have to pay a certain amount if the
A written promise to pay an amount company is wound up
of money to someone at a given time
or on demand Purchasing power
The ability of a person’s money to
Prospectus buy goods and services, affected by
A document from a public company the cost of those goods and services
that wishes to sell shares to the public,
giving details of the company’s past
performance and its plans for the future
31
Qq qualified audit
*Qualified adult Receivership

A person’s spouse or partner, whom A situation that arises when a person,
the person wholly or mainly maintains, known as a receiver, is appointed to sell
or if the person is single, widowed or a company’s assets to pay off a secured
separated and has children, a person debt that the company cannot normally
aged 16 or over who minds the repay when repayments are due
children, lives with the person and is
being maintained by them Redemption
Paying off all the money borrowed
Quarterly statement under an agreement
A statement that a person receives
every three months (one quarter of Refer to drawer
the year) A statement written by a bank on a
cheque that it will not pay, for example
if there is not enough money in a
person’s account, before returning it to
Rr the branch of the bank with the
Rate relief account the cheque was paid into
A reduction on all or part of a
business’ bills for utilities such as gas Refund
or electricity As a noun, a repayment of part of an
amount that a person has paid
Rebate
A return of part of an amount a person Reinsurance
has paid, usually in relation to tax Insurance protection bought by an
insurer to cover it against paying out
Receipt a lot of money to policyholders and to
A document to confirm that money help it take on more business
has been received, usually for goods
and services Remittance
A payment for something
Repayment
An amount due to be paid on money
borrowed
32
savings account Ss
Repayment protection Revolving credit
insurance Credit that is carried over from one
Like a payment protection plan, a billing period to the next when a
policy that makes repayments if a person does not make the full credit
person cannot afford them, for example card repayment when it is due
if they become ill or lose their job
Rights issue
Repossess An issue of extra shares to a
Take back ownership of something, company’s shareholders at a discount,
for example when a mortgage based on the number of shares they
provider takes over a person’s home already hold; shareholders can sell the
because they have failed to pay back rights if they do not wish to use them
the mortgage on time
Risk
Reserves Chance or uncertainty associated with
Amounts that a company sets aside in offering loans and with certain
one year’s accounts that it can spend investments
in later years
Retained profits
Profits earned by a business that have Ss
not yet been spent Savings account
An account in a bank, building
Retirement mortgage society or post office, that allows a
A mortgage that allows a person to person to build up savings and
draw down some cash for their interest. A person cannot usually
retirement based on the home’s value access this account everyday
and that the person pays off with
interest when the house is sold Schedule of payments
A list of payment amounts and the
Return dates they are due
An amount, expressed as interest, that
a person gets back when they invest
or save money
33
Ss securities
Securities Share capital

Stocks, shares, debentures and so on Money invested directly in a company
that involve a right to receive interest by its shareholders
or dividends from the investment
Share certificate
Security A document that certifies who owns
Something of value that one person or shares in a company by listing the
organisation promises to allow a type, amount and serial numbers of
lender to sell to pay off any debt that shares owned by the shareholder
the borrower cannot repay when
repayments are due Share price
The cost of buying a share on the
Secured loan stock market; the more shares are
A loan that is borrowed against a bought, the higher the price
particular asset, known as security; if
a person cannot make the repayments Shareholder
when they are due, the lender can A person who owns a share or shares
take ownership of the asset in a company
Self-assessment Short term

A system for taxpayers to work out A period of time of up to five years in
themselves the tax they owe to the terms of savings and loans
Government each year
Signatory
Service contract A person who signs a document, such
A contract for maintenance services as an application form or cheque
Share *Social insurance

An investment that makes a person A Government insurance plan that
part-owner of a public company, compensates people for loss of
along with all other people who income due to old age,
have shares unemployment, disability, illness or
maternity, for example, and that is
funded through PRSI contributions
34
sort code Ss
Sort code State retirement pension
A six-figure code that identifies a A pension a person gets from the
person’s bank branch and is printed State when they retire
on bank statements
Statement
Spot rate A document from a bank or building
The exchange rate for foreign society that shows recent payments
exchange transactions that are into and from a person’s account
carried out straightaway
Statutory accounts
Stamp duty Company accounts that must be
Tax that a person pays when they buy filed with the Companies
a second-hand property over a Registration Office by law
certain value, currently €190,500
(as at September 2004) Statutory audit
An audit, required by law, of a
Stakeholder pension company’s accounts by certain
A type of pension scheme with low qualified accountants
charges and flexible payments
Stock exchange
Standard Variable Rate (SVR) A market for stocks and shares
mortgage
A mortgage in which the interest rate Stockbroker
can rise and fall in line with the interest Someone who buys and sells stocks
rate changes set by the European and shares for clients
Central Bank
Stock market
Standing order A place that trades stocks and shares
A method of paying fixed amounts on a
regular basis, for example into a Store card
pension fund, by allowing a company or A card available from a particular
other organisation to take money straight shop that lets a person buy goods
from a person’s bank or building society from that shop on credit; like a credit
account, depending on how much the card, payments are due each month
person has in their account
35
Ss subject to status
Subject to status Surrender value

Something that depends on a The sum that an insurance company
person’s situation, for example a loan pays a policyholder when they cancel a
that depends on whether a person life assurance policy before its date of
has a good credit history maturity; this value is usually lower than
the value of the policy when it matures
Subscribers
People who set up a limited company
or who pay in advance to receive
something regularly Tt
Take home pay
Subsidiary Earnings after tax, PRSI and other
A company that is controlled by deductions
another company
Tangible assets
Superannuation Assets that can be touched, such as
A regular contribution to a pension equipment and furniture
scheme by an employee
Tax avoidance
Surcharge A legal way of reducing the amount
An extra charge by a bank if a of tax a person owes
customer does not keep to their
agreement Tax code
A reference for different types of
Surety employees to tell how much income
Similar to a guarantor, someone who tax a person should pay in a certain
takes responsibility for someone else’s period and how much of their pay is
debts or promises, and guarantees tax-free
that they will be paid or fulfilled
Tax credit
The amount of income on which a
person does not pay tax, including
their personal allowance and tax
relief for any mortgage or health
insurance payments
36
tax evasion Tt
Tax evasion Term deposit
An illegal way of reducing the A type of account in which a person
amount of tax a person owes, for agrees to leave their savings for a
example by concealing income fixed time (the term) or face penalties
Tax return Term assurance

A form that a self-employed person A simple form of life assurance that a
must fill in to record their income and person takes out for a set period of
any allowances for the year and send time (for example, 10, 20 or 25
in to the Revenue Commissioners on years) and guarantees to pay out a
time to avoid penalties and fines specified sum if the person dies
during that period of time
Tax this period
A statement on a pay slip to say how Term loan
much income tax a person owes in A loan that a person or organisation
particular period, based on a must repay within a certain period,
person’s tax code for example three or five years
Tenant Term policy

A person who pays rent where they live Insurance that provides cover for a
fixed time; if a person is insured
Tender against serious illness and they do
A written offer by a company or become seriously ill within the term,
person to do a piece of work a they do not receive any payment
certain way to a certain deadline
and at a stated price Third party, fire and theft
insurance
Term Motor insurance that pays out if a
A clause that forms part of a contract person accidentally causes damage to
and a length of time for which another person’s car or if their own
something lasts, such as the period car is damaged by fire or stolen
for paying back a loan
37
Tt tied agent
Tied agent Trading profit

Somebody, usually a broker or Similar to gross profit, the profit from
financial advisor, who is tied to a selling goods and services before
certain number of financial services accounting for expenses
suppliers and can only recommend
their products Transaction
Any payment into or out of a person’s
Timeshare or company’s account
A way of owning property, usually a
holiday home abroad, jointly with Travel insurance
other people, each of whom takes Insurance that can pay for lost
turns to occupy the property for a luggage or for medical treatment
fixed period needed for certain illnesses and
injuries when a person travels abroad
Total deductions
A combination of all amounts, such as Travellers’ cheques
tax, pension payments, PRSI and Cheques in a certain currency that
union subscriptions, taken from a a person buys and signs before they
person’s gross pay leave for another country and that they
can use to buy goods and services
Tracker bond abroad by signing the cheques again
A type of investment where the final and showing identification
value of the fund depends on the
performance of shares and where a Turnover
persons initial investment is usually The total value of a business’ sales
guaranted over a particular period
Tracker variable rate

A rate of interest that tracks the
European Central Bank rate whether it
goes up or down; the lender is obliged
to pass on any changes to its customers
38
unauthorised overdraft charges Uu
Uu *Universal payment
A social welfare payment or benefit
Unauthorised overdraft that a person receives no matter how
charges many PRSI contributions they have
Fees that a person must pay if they made or the level of their means;
take out more money than they have examples include Child Benefit and
in their account without the permission Free Travel
of their bank or building society
Unit trust
Uncleared cheque A fund that a person invests in by
A cheque that has been paid into an buying units; their money is used by a
account, but for which money has not trust manager to buy investments and
yet been collected from the bank that the value of the units changes from
will pay the cheque time to time in line with the value of
the fund
Underwriter
An organisation, usually an insurance Unlimited company
company, that agrees to pay a claim A company that does not limit what
on an insurance policy its shareholders need to pay towards
the company’s debts if the company is
Underwriting wound up
What happens when an investment
firm, such as a bank, agrees to buy Unsecured loan
any unsold shares from a company A loan that is not backed by a
after it has offered them to the public particular asset; if a person does not
pay back the loan, the lender cannot
or take any asset in return, but may still
take the person to court
What happens when assessing
whether a person can afford a loan Unpaid item
from a financial institution An item such as a cheque, standing
order or direct debit that a bank
refuses to pay
39
Uu unpresented cheque
Unpresented cheque Visa

A cheque that a person has given to An international card payments
another person, but has not yet organisation owned by banks
appeared on the bank account that worldwide, which provides credit cards
will pay it
Voluntary excess
Unsanctioned overdraft A sum of money that an insured
An overdraft that a customer of a person agrees to pay for any loss,
bank or building society has obtained damage or injury before an insurance
without the bank’s permission company will make any payments
Upfront fee
A fee that a person owes or must pay
in advance Ww
Whole-of-life policy
Utility bill Life assurance that pays out an agreed
A bill for a utility, such as gas, sum on the death of the person who
electricity or the telephone took out the insurance, as long as they
continue to pay their premiums
Vv Will
A legal document containing
Valuation point instructions on how a person wishes
The date and time when a fund their estate to be distributed after
manager revalues the investments in a they die
fund, such as a unit trust
Withdraw
Variable interest rate Taking money out of an account
An interest rate that is likely to go up
or down over time
VAT
Value added tax – a tax paid to the
Government for most goods and services
40

A Plain English Guide To Financial Terms

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A Plain English Guide

Accidental damage AVC

Account Affinity card

Auditor’s report Balance transfer

Authorised share capital Balance sheet

Available credit Balloon payment

Basic bank account Bid/offer spread

Beneficiary Bonus issue

Book value Broker – Insurance

Bridging loan Bull

Cashback Certificate of insurance

Cash outflow Cheque

Claim Comprehensive motor

Contract Cooling-off period

Conversion rate Credit

Credit history Credit scoring

*Credits Current liabilities

Current assets Debited

Debt consolidation Dependant

Deposit rate Discounted rate mortgage

Direct debit Dividend

Exit charge Final dividend

Fiscal Floating exchange rates

GDP Guaranteed interest rate

Gross pay Honouring a cheque

Illustrations Indemnity bond

Indemnity Independent financial advisor

Index-linking Insurance policy

Insolvent Insurance quotation

Instalment Intangible assets

Instant access Interest

Legal status Loan shark

Liabilities Loan-to-value (LTV)

Limited company Loyalty card

Monthly instalment Mutual organisation

Mortgage broker Negotiable instrument

Outstanding instalment P60

Pension fund PIN

*Qualified adult Receivership

Securities Share capital

Self-assessment Short term

Share *Social insurance

Subject to status Surrender value

Tax return Term assurance

Tenant Term policy

Tied agent Trading profit

Tracker variable rate

unauthorised overdraft charges Uu

Unpresented cheque Visa

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