Savings terms definitions

Glossary of savings terms

AER

AER stands for Annual Equivalent Rate and shows what the interest rate would be if interest was paid and added each year. This will enable you to compare more easily the return you can expect to receive from your savings over time.

ATM

An automated teller machine, more commonly referred to as a cashpoint/cash machine.

BACS payment

A Bankers’ Automated Clearing Services (BACS) payment is a way of making payments directly from one bank account to another. They're mainly used for Direct Debits and direct credits from organisations.

The Bank of England Base Rate

The Bank of England’s Official Bank Rate, commonly known as the Bank of England Base Rate, is used throughout the financial services industry.

In short, the Base Rate is there to keep inflation on target and make sure the economy grows in a sustainable way.

Bond

Bonds are a type of savings account. Usually bonds are for a fixed period of time/rate or both.

The Building Societies Association / BSA

The BSA represents the UK building societies. The objective of the BSA is to push for the best outcomes for building societies. They work with, amongst others, the UK Government.

Building Society

Building societies are owned by their members rather than external shareholders. Borrowers and savers automatically become a member of their society when they take out a mortgage or open a savings account.

CGT

Stand for Capital Gains Tax. CGT is a tax on the profit of certain assets/items you have to pay to Her Majesty's Revenue and Customs (HM Revenue and Customs or HMRC) when you sell them e.g. property, stocks and shares.

Cash ISA

A Cash ISA is an Individual Savings Account where you don’t pay tax on the interest earned. There is a limit to the amount you can save which normally changes each tax year, but in a nutshell all interest earned is tax-free.

Child Trust Fund (CFTs)

Accounts set up especially for anyone under the age of 18. These have since been replaced by Junior ISAs.

Charitable Foundation

The Yorkshire Building Society Charitable Foundation is a registered charity (number 1069082), independent of the YBS Group, and is run by two internal and three external trustees. It's their role to decide which good causes will receive support from the Charitable Foundation.

To find out more about the work of the YBS Group Charitable Foundation please visit: http://www.ybs.co.uk/charitablefoundation/index.html

CHAPS

Clearing House Automated Payment System (CHAPS) is an electronic bank-to-bank payment system used in the UK that enables same-day payments to be made, provided it’s done by a certain time.

Deposits

Another way of describing the amount you have in your current or savings account.

Direct Debit

An arrangement made with a bank that allows a third party to transfer money from a person's account on agreed dates. For example you might pay your council tax or electric bill by Direct Debit.

Easy Access Account

An easy access account is an account that normally offers more flexibility for accessing you money when you need it.

E-account

This refers to an account setup and or managed online.

Electronic payments

An electronic payment is a non-cash payment that doesn't involve a paper cheque. Methods of electronic payments include credit cards, debit cards and faster payments.

Electronic verification system

An electronic verification system helps to verify a customer’s identity. In certain cases (for example if you are not listed on the electoral roll or you have recently moved house) we may need additional proof of identity.

Faster Payments Service

This is a UK payment clearing scheme for payments made electronically. It reduces payment times between different banks' customer accounts from three working days using the BACS system, to typically a few hours.

Financial Ombudsman Service (FOS)

The Financial Ombudsman Service is the UK’s official body in resolving problems with financial services.

If a business and a customer can’t resolve a complaint themselves, the FOS can give an unbiased view. If they decide someone’s been treated unfairly, they have legal powers to correct the matter.

FCA

The Financial Conduct Authority (FCA) regulates the conduct for financial services firms and financial markets in the UK. Its aim is to make markets work well – for individuals, for business, large and small, and for the economy as a whole.

FSCS

The Financial Services Compensation Scheme (FSCS) is the UK’s deposit guarantee scheme for customers of UK authorised financial services firms. The FSCS compensates customers if a firm has stopped trading or does not have enough assets to pay claims made against it.

Flexible ISA

An ISA that offers the functionality to withdraw and replace money in your ISA in the same tax year, without the replacement counting towards the ISA subscription limit. Not all ISAs are flexible and offer this functionality.

Fixed Rate

This refers to the rate of interest on offer on a product/account. Fixed rate of interest means that the interest rate payable on your account will remain the same from the time you open your account until the end of the fixed rate period. Traditionally but not always, the longer the term (years) the higher the interest rate will be.

Gross Interest

Gross interest is the amount earned before tax is applied.

Help to Buy: ISA

Help to Buy: ISA is a Cash ISA especially designed for people saving up for their first home. It is a Government scheme which provides an additional bonus subject to certain conditions being met.

HMRC

Her Majesty's Revenue and Customs (HMRC) responsibilities include the collection of taxes such as income tax, corporation tax etc. for the UK.

Interest Rate

Displayed in the form of a %, an interest rate on a current or savings account is the amount earned. So a 1.00% interest rate will earn £1 on a saving deposit of £100, assuming the account is open for a year.

Instant Access

The main benefit of an Instant Access account is there is no loss of interest or notice required for withdrawals. The downside is you could get more interest from other types of account.

ISA

An ISA is an Individual Savings Account. They are tax-free accounts with a set limit on the amount you can save in them each year. The tax year runs from 6 April one year until 5 April the following year.

ISA Transfer in

Most ISAs allow you to transfer in to them. This means you transfer an existing ISA into another ISA, including into other provider’s ISAs. By filling out an ISA transfer from the new provider, the new provider should sort it all out, including moving the money over for you, keeping your ISA cash permanently tax-free.

ISA Transfer out

You can transfer your Individual Savings Account (ISA) from one provider to another at any time. If you want to transfer money you’ve invested in an ISA this current year, you must transfer all of it. For money you invested in previous years, you can choose to transfer all or part of your savings. Always check with your provider for any restrictions or charges they may have on transferring ISAs.

Junior ISA

An ISA designed for anyone under 18. They then remain tax-free until their 18th birthday, when it gets converted into an adult ISA.

LINK

LINK is the UK's cash machine network. Effectively every cash machine in the UK is connected to LINK, and is the only way banks and building societies can offer customers access to cash across the UK. All the UK's main debit and ATM card issuers are LINK members.

Loss of Interest

Some products charge a loss of interest if you make a withdrawal. An example of how it appears is ‘withdrawals subject to 30 days’ notice or loss of interest’. In some cases (usually notice accounts) you may be able to avoid the loss of interest by giving the right amount of notice.

Maturity

The date that an account will end. This may either be at a set date in the future or on anniversary of the account opening. Usually, you will be contacted just prior to maturity to remind you.

Notice period

The notice period on a savings account is the number days you need to give before you can access the money without losing interest. So an account with a 90 day notice period requires you to tell the bank or building society 90 days in advance of your intention to make a withdrawal.

Online Account

An account you open and manage online. Another name for an e-account.

Passbook

Generally our branch based savings accounts come with a passbook. A passbook lets you record the deposits and withdrawals you make on your account. We recommend that you have your passbook updated at least once a year.

Online savings accounts do not have a passbook as you can log on at any point and check your balance.

p.a.

p.a. stands for per annum. So if the interest rate is 1.30% p.a. it means the amount of interest earned every year.

PRA

The Prudential Regulation Authority (PRA) is responsible for the prudential regulation and supervision of around 1,700 banks, building societies, credit unions, insurers and major investment firms. An aim of the PRA is to promote the safety and soundness of the firms it regulates.

PSA

Stands for Personal Savings Allowance. Every saver has a PSA and is the amount you can earn in interest without paying tax on it.

To find out more please see https://www.gov.uk/government/publications/personal-savings-allowance-factsheet/personal-savings-allowance

Power of attorney (PofA)

If you appoint a power of attorney, you are appointing someone (normally a family member) to act on your behalf. It is only valid while you still have mental capacity to make your own decisions about your finances, so you’re aware of what your attorney are doing.

Please note that formal documentation is required to appoint Attorneys to act on your behalf.

To find out more about the different types of Power of Attorneys etc., please see: https://www.gov.uk/power-of-attorney/overview

Regular Savings Account

A savings account that usually allows you to pay in monthly and may allow you to make limited withdrawals without restrictions.

Small Change Big Difference®

Our Small Change Big Difference®(SCBD) scheme allows our customers to donate to the Charitable Foundation the annual pence of interest from their savings or mortgage accounts. The average donation is less than 50p per year and the maximum is just 99p. Its aim is to make big difference to the lives of others in the local communities.

Standing Orders

Standing orders are a way of setting up a regular, fixed payment from your bank account. You can set a payment to be taken at a certain frequency (for example, the 1st of each month) for a set amount of time.

Please note that on our currently available savings accounts you are not able to set up standing orders to other accounts.

Tax-free

If an account is tax free, like an ISA for instance, it means that any interest earned is exempt from UK income tax.

Term

Term normally refers to the life of the product. This could either be for a set length or time e.g. 1 or 2 years or to a set date in the future.

Variable Rate

A savings account with a Variable rate of interest means that the interest rate payable on your account can change and can move both up and down.

Verifying your identity

We have a responsibility to verify your identity when you are opening a savings account or applying for a mortgage. This helps prevent financial crime and money laundering. If we are not able to identify you using an electronic verification system, you will be requested to provide one or more items of documentation to prove your identity and address.

Withdrawal

Taking your money from any account you may have.

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