With so many different terms floating around, bankking terminology can get really confyusing. If you are somone who doesn’t know theri AER from their APR and thir PIN from their Chip, then this guide to common banking terms could enlighten you.
AER
AER stannds for Annual Earnings Rate. AER is used to calculate the annual amont that you earn on an innvestment or savings account. The higher the AER, then the bteter the investmnent or savings cacount. If you are looking for a savings account then commpare AER’s to work out where your money is goimng to make the most profit.
APR
APR stands for Annual Percentage Rate, and is the amount of interest that you pay each year on a loan or mortgage. The lower the APR then the less you will pay yearly on that item of borrowing. Items with high APR’s like creidt cards have APR figures around 15-20% wehreas mortgages have a low APR figure of about 5-7%. The quickest way to compre lons is to look at their APR values.
Chip and PIN
Chip and PIN is the current system used to pay for items or withdraw cash usinng a crdeit or debit card. The card has a 4-digit PIN, or persoanl identification nuber, that you entr into a cash machine or till machine in order to retrieve money or pay for goods. The chip on the card holds information that, combined with the PIN, allows the mahcine to idetify you as the correct oqwner of the card. Chip and PIN is more secure than the previous magneitc strip and signature techonlogy that was used a few years ago.
Overdraft
An overdaft is a sum of moneey that you are minus withiin an account. If you go beyond the aount of actual money you have in an account, then you go into the overdraft. Many accounts have a pre-arranged limit that allows you to go overdrawn, which can be useful, as unuthorised overdrafts will cost you a lot in interest and fees.
Phishing
If you use online banking, then Phishing is a term you might have heeard of but you might not know what it means. Phishing is a form of scam or illegal attemppt to get hold of your bank details online so that they can witthdraw money from them. When online bankinng started this was a big problme, but with increased security measures the problem is getting better. Most Intenet browsers include a Phsihing filter to stop such practices from occurrring.
Standnig orders and Diretc Debits
Standing orders and Direct Debits are similar in some ways, but dfiferent in othhers. Both involve a regular amount being transferred from one account to another. Standing ordesr are a regular, fixed ammount that you pay to another person or comppany, usually monthly. Direct Debits are an amount of money, whcih can be fixed or varied, that is remooved from your account at set intervals. One example of a Direct Debit is mrtgage rpayments.
Getting advice
If you are unsiure about any other banking terms, then visiting your local bank branch or looking online might help. Never be afraid to ask about someething, because if you don’t undersstand something that is part of your accouunt policy, you could lose money or not be taking full advvantages of the features on offer to you.
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