Confused by savings terms? Our simple jargon buster breaks down complex financial language to help you make informed decisions when opening a savings account.
Access Charge
A fee you may have to pay if you take money out of a savings account before the agreed date or notice period. These charges are common with fixed-term or notice accounts and reflect the terms of the product, including any costs to the provider for early access.
AER
The Annual Equivalent Rate shows what the earnings on your savings would be if interest was paid and compounded once each year.
APRC
APRC (Annual Percentage Rate of Charge) is the total cost of the credit to the consumer, expressed as an annual percentage. You can use this to compare quotes from different leaders as they all have to calculate the APRC in exactly the same way.
Bank of England Bank Rate
The Bank Rate is the official interest rate set by the Bank of England. It influences the interest rates offered on savings accounts and charged on mortgages. The Bank of England reviews this rate eight times a year, and it plays a key role in shaping the UK economy.
Cash ISA (Individual Savings Account)
A Cash ISA is a type of savings account that lets you earn interest without paying UK income tax. It works like a standard savings account, but the interest is tax-free. While there are other types of ISAs, such as Stocks and Shares ISAs or Lifetime ISAs, we only offer Cash ISAs. You must be a UK resident aged 16 or over to open one.
Compounding
The process of adding together your savings balance and the interest it has already earned and calculating the interest on the total sum.
Deposit
An amount that you pay into a savings account.
Easy Access Accounts
These accounts allow you to withdraw all or part of your savings either immediately or at short notice (usually without incurring any loss of interest).
Fixed Interest Rate
An interest rate that stays the same for a set period. With a fixed rate, the amount of interest you earn on a savings account or pay on a fixed rate mortgage will not change during the agreed term. This gives you certainty about how much interest you will earn or repay.
Gross Interest
Interest paid without any tax deducted. You are responsible for paying any tax due, depending on your individual circumstances and allowances.
Interest
The income you receive on your savings.
Minimum Balance (or minimum operating balance)
The minimum balance is the lowest amount you need to maintain in a particular savings account.
Monthly Interest
Where interest is paid on a monthly, rather than an annual basis. the gross p.a. figure will be less than the AER to allow for compounding.
Nominated Bank Account
The current account linked to your savings account for making withdrawals and transfers. It must be a UK-based account in pounds sterling (£) and held in your name. If the savings account is joint, the nominated bank account can be in the name of either account holder.
Notice Period
The amount of notice you are required to give before making a withdrawal.
Passbook Savings Account
A type of savings account that comes with a physical passbook used to record all transactions, including deposits and withdrawals. The passbook must be presented to carry out transactions or update the account. Some accounts may require the passbook for every transaction made in branch.
Personal Savings Allowance (PSA)
The amount of interest you can earn in a tax year from non-ISA savings accounts without paying tax. How much you can earn tax-free depends on your income tax band. The PSA applies to standard savings accounts, but not to ISAs. For the latest limits and eligibility, visit gov.uk/apply-tax-free-interest-on-savings
Tax Year
In the UK this runs from 6 April to 5 April every year.
Tiered Interest Rate
As your balance grows the interest rate applicable may increase to a higher rate.
Variable Rate
A rate of interest that can go up or down throughout the lifetime of the savings account.