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OneFamily’s Financial Jargon Buster

We understand all this money and finance talk can be a little complicated. You wouldn’t be the first person to feel this and certainly won’t be the last!

So we’ve put together the following guide, to help explain all the financial jargon you may see now and again, helping you tackle all those daunting terms and acronyms. You’ll be an expert in no time!


AER stands for Annual Equivalent Rate. It makes comparing savings accounts easier by showing what you would get in interest if you put money into a savings account over a year and left it there.


APR stands for Annual Percentage Rate. This refers to the annual cost of borrowing money with any associated costs from a lender.


This is the amount of money you will have in your account at any given time.


Budgeting is looking at what money comes in and out of your account and setting limits to stick to on certain aspects of money going out.

Compound interest

This is when you save money and earn interest on your savings, also earning additional interest on top of that interest. See our infographic for an example.

Credit score

A credit score is a number used by lenders to help view the risk of lending you money and whether you qualify for a particular credit card, loan, mortgage or service. This is based on a credit report of your history on what kind of borrower you are.


This is an amount of money which has been borrowed from one by another and is owed or due.


A fund is a pool of money pulled together from lots of different investors and then invests in various types of assets such as property, shares, bonds and cash.


This is the amount earned when saving money or the amount charged by a lender when borrowing money.

Interest rate

This is the percentage of the amount you will earn on top of the money you are saving or the percentage you will be charged on top of the money you’re borrowing.


Investing is putting some of your money away with a view to increasing the amount while taking a degree of risk.


ISA stands for Individual Savings Accounts in which you will put money into to save or invest for the future. An ISA is a tax efficient way of investing.

Stocks & shares

When investing in a stocks & shares ISA, you are investing into company shares and other fixed interest investments, with potential for greater growth. It’s important to remember with stocks & shares, investments can go down as well as up so you could get back less than you have paid in.


This is a sum of money the government collects from taxpayers so it can pay for public services.


VAT stands for Value Added Tax and is the tax you must pay for on goods and services. The standard rate of VAT in the UK is 20%.

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