Reference
Money Glossary
Capital at risk. The value of investments can fall as well as rise, and you may get back less than you put in. Past performance is not a guide to future returns.
FLD is not a lender or a credit broker and does not arrange credit. This is general information, not advice to borrow. Any representative APR shown is an example, not a personal quote: the rate you are offered depends on your circumstances and may be higher.
Last updated: .
Plain-English definitions of common UK money terms. Short answers first — then a link to a fuller guide where we have one.
This is general information, not financial advice. Figures such as allowances and FSCS limits can change.UK / FSCS.
A
AER (Annual Equivalent Rate)
A yearly way of showing a savings interest rate as if interest were compounded once a year. Helps you compare accounts that pay interest monthly, quarterly or yearly.
More: AER explained
APR (Annual Percentage Rate)
A yearly way of showing the cost of borrowing, including interest and certain compulsory fees. Used on credit cards, loans and other credit ads.
More: APR explained
Allowance (ISA)
The maximum you can pay into ISAs in a tax year. For 2026/27 the overall adult ISA allowance is £20,000 (GOV.UK). Unused allowance does not normally roll over.
More: ISA allowance rules · ISAs hub
B
Bank Rate
The interest rate set by the Bank of England’s Monetary Policy Committee. It influences many mortgage and savings rates but is not the same thing as inflation (CPI).
Related: Inflation explained
C
Capital at risk
A warning that the money you invest can fall as well as rise. You may get back less than you put in. Savings cash and investments are different risk stories.
Related: Investments hub
Cash ISA
An ISA that holds cash savings. Interest is tax-free inside the ISA rules. Subscriptions count toward your yearly ISA allowance.
More: ISAs · ISA allowance rules · AER explained
Compounding / compound interest
Earning interest on your original balance and on interest already added (if you leave it in). Over time that can grow faster than simple interest on the starting sum alone — illustrations are not guarantees.
CPI (Consumer Prices Index)
An official UK measure of consumer price inflation. The Bank of England’s 2% inflation target uses CPI.
More: Inflation explained
CPIH
CPI plus owner-occupiers’ housing costs (and related items in ONS descriptions). ONS describes CPIH as its most comprehensive consumer prices measure.
More: Inflation explained
Credit report / credit file
The history of accounts, payments and searches that credit reference agencies hold about you. Lenders may look at your file (and scores) when you apply for credit.
Credit score
A number produced by a credit reference agency or lender model to summarise risk. There is no single official UK score — scales differ.
More: Credit score basics
F
FSCS (Financial Services Compensation Scheme)
Protects eligible deposits if an authorised firm fails. The deposit protection limit is £120,000 per person per authorised firm from 1 December 2025 (FSCS / GOV.UK). FSCS does not protect you from inflation or investment losses.
Related: Savings · AER explained
G
Gross interest
Interest before tax is taken into account. UK savings interest is usually paid gross (tax not taken off at source). You may still owe tax if interest exceeds your allowances — check GOV.UK / MoneyHelper.
More: AER explained
H
Hard search
A credit search that usually happens when you make a full application. It leaves a footprint other lenders can see. Several hard searches close together can look like higher risk.
More: Credit score basics
I
Inflation
A sustained rise in the general level of prices. The same cash amount buys less over time. Official UK measures include CPI and CPIH — check dated ONS figures, not remembered percentages.
More: Inflation explained
ISA (Individual Savings Account)
A tax wrapper for savings and investments. Interest, dividends and gains inside an ISA are generally free of Income Tax and CGT in the usual ISA sense. Investments can still fall in value.
More: ISAs hub · ISA allowance rules
N
Net interest
Interest after tax. Seen less often in ads now because savings interest is usually paid gross. Useful mentally when comparing a taxable account with a Cash ISA.
More: AER explained
Nominal return
The return or balance growth before adjusting for inflation. Your statement can look better while purchasing power still falls.
More: Inflation explained
R
Real return
Roughly, what a return is worth after inflation — your purchasing power. Compare carefully with AER and dated CPI/CPIH figures.
More: Inflation explained · AER explained
Representative APR
The APR shown in credit advertising under FCA rules. It is a starting point for comparison — not a guarantee of the rate you will be offered. Your personal APR can differ.
More: APR explained
S
Soft search
A quotation, eligibility check, or you viewing your own credit file. Soft searches generally do not leave the same application footprint as hard searches. Checking your own file does not “use up” credit.
More: Credit score basics
Statutory credit report
A free credit report you can request from each credit reference agency by law. It shows file data; a colourful “score” on an app may be a separate product.
More: Credit score basics
FAQ
What’s the difference between AER and APR?
AER shows a savings interest rate as if interest were compounded once a year, which helps you compare savings accounts. APR shows the yearly cost of borrowing, including interest and certain compulsory fees. More: APR explained.
Is there one official UK credit score?
No. Scores are produced by credit reference agencies or lender models, and the scales differ. Lenders may also look at your credit file, which holds the history of your accounts, payments and searches.
What does “capital at risk” mean?
It’s a warning that money you invest can fall as well as rise, so you may get back less than you put in. Cash savings and investments carry different kinds of risk.
How much can I pay into ISAs each tax year?
The overall adult ISA allowance is £20,000, and unused allowance doesn’t normally roll over. Check GOV.UK for the figure in force for the current tax year.
How are CPI and CPIH different?
CPI is an official UK measure of consumer price inflation. CPIH adds owner-occupiers’ housing costs, and ONS describes it as its most comprehensive consumer prices measure. Dated ONS figures are more reliable than remembered percentages.
More beginner guides
Get our weekly email
The Friday Finance Lowdown — five minutes of the money stuff worth knowing.
Free to join. See our privacy policy for how we handle your email address.