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A handy guide to understanding bank terms
You can use Internet Banking to give any of your accounts a nickname. You can give your account a name that describes what you use it for, like 'Household Bills', 'Holiday Money' or 'Payments to Suppliers'. The nickname can be any letters or numbers you choose up to 39 characters long. If the account is a joint account and the other person is registered for Internet Banking they won't see the nickname as it's for your use only. Also, it will only show when you use Internet Banking and won't show on your normal bank details, like statements.
AER stands for Annual Equivalent Rate. Whenever you see an advert for a savings account which shows an interest rate, you will see the AER. This means you can use the AER to compare accounts. It shows what the interest rate would be if your interest was paid and compounded, i.e. calculated on both the amount of money saved and the interest that has been added to it, once each year.
Antivirus software will detect and delete viruses that attempt to get on to your computer. Anti-virus is only as effective as the last update so you should update your anti-virus signatures and software regularly. If you use anti-virus software you should regularly download updates from your anti-virus software supplier.
APR stands for the Annual Percentage Rate of charge. This refers to the total cost of your borrowing for the year including any fees and charges. You can use it to compare different credit and loan offers. We will tell you the APR for your loan or credit card before you sign an agreement.
The Bankers Automated Clearing Service (BACS) is a free service for making direct credits and debits. Payments using BACS will usually take three to four working days to credit the beneficiary's account.
The amount of money you have in your account at a particular time. Sometimes the balance given by a bank will include money that has been paid into your account, but isn’t yet available to use, for example a cheque that hasn’t cleared. This is sometimes called your available balance or available funds.
A balance transfer is when you move an existing balance from one credit card to another.
The Base Rate is set by the Bank of England and it affects the interest rates offered by Banks, Building Societies and other financial institutions.
A cheque written by a bank. To get a banker’s draft, you will need to transfer cleared funds from your account to your bank. The bank then gives you one of the bank’s cheques (banker's draft). The advantage to the person being paid is that a banker’s draft will not bounce due to insufficient funds, so they are often requested when making large purchases. Usually, banks will charge a fee for issuing a banker’s draft.
Borrowing is a form of lending money or providing credit which can be used to buy goods or services.
Cheques bounce when there are not enough funds in the account the cheque is written from (or the account holder asked the cheque to be cancelled). The the bank will return the cheque to the account holder and not pay the beneficiary of the cheque.
A business loan is a method for a business to obtain money and to spread the payments over an agreed period of time. You pay interest on the amount you borrow. This could be a fixed rate where your monthly repayments remain the same or a variable rate where your repayments are linked to the base rate and will vary dependent upon any changes to the base rate.
A buy-to-let mortgage is a mortgage for people who want to let their property. Buy-to-let mortgages are available for customers who are buying a new property, moving their mortgage from another lender, switching deals or borrowing more.
Card Payment Protection Cover could take care of your credit card payments if you are unable to work due to an accident, sickness or unemployment.
Card Protection provides valuable protection in case you lose your credit, debit or store cards or if they are stolen.
Your Card Security Code is the last three numbers that appear on the back of the card you are using to make the payment.
This is where you can use your debit card in return for cash in places such as shops and supermarkets.
The Clearing House Automated Payment System (CHAPS) is used to transfer cleared sterling funds within the UK, for same day settlement. There is a £25 charge for CHAPS payments. Same day CHAPS payments can only be made if the instruction is received before 4.25pm.
A cheque is a written request to the bank to pay the amount of money specified on the cheque to the person or organisation named on the cheque (the payee) who will pay it into their account. Once this has happened your bank will take the amount from the relevant account.
CHIP and PIN is a system which allows you to approve purchases made with your credit or debit card by entering a four-digit PIN number which only you know. For security, you shouldn’t write your PIN number down or tell it to another person.
The time it takes for the money paid into an account to clear and be available for use.
Lloyds Bank ClickSafe gives cardholders with added security when purchasing over the Internet. The service allows you to choose a personal password to ensure that only you can make purchases with your card when shopping online.
A credit card is an open line of credit often issued with a plastic card that allows you to purchase goods and services on credit and pay for them later, usually with interest added to the balance. Some credit cards will allow you to transfer a balance from another credit card on to it, often at a promotional interest rate.
Credit rating is a rating system used by financial institutions, to judge an individual or company's creditworthiness. Depending on how many points the applicant gets when his/her personal details are run through the rating system, the financial institution will either accept or reject the risk. Financial institutions rely on computerised credit rating systems, and co-operate with each other in providing details of bad credit risks.
Credit reference agencies are organisations that gather information about people and businesses across the UK. This information comes from lenders such as banks, credit card companies and fraud prevention agencies, as well as records in the public domain.
Credit report is a report issued by a credit agency usually for a small fee which highlights someone's past borrowing behaviour and credit rating.
Credit scoring is a way of assessing someone’s financial status. This is used to decide which credit facilities can be offered to customers.
A Credit search is when we carry out a search on your name and address with a credit reference agency to help us understand more about your credit history. Each time a search is done it is noted on your credit record to let other organisations know that we have asked for information about you.
Daily interest is interest calculated on the balance outstanding each day. So, when you make a payment, interest is calculated on the new balance straightaway.
A debit card is a plastic card that allows you to spend in-person or online and withdraw money from your account instantly at a Cashpoint® machine. Sometimes a debit card is referred to as an ATM or Cashpoint® card.
A deposit is money paid into an account and is an example of a credit. You can make a deposit in various forms, including in cash, or by cheque or electronic transaction.
A Direct Debit is a method of payment where you give a company permission to withdraw money from your account and pay it into their account. Only companies can be paid using this method, not individuals. Payments are normally made on the same day of each month, quarter or year, depending on the payment frequency you have selected. Payments made by Direct Debit are protected by the Direct Debit Guarantee scheme.
The Direct Debit Guarantee scheme says that:
A dormant account is an account that hasn’t been used for a period of time (usually at least 3 years) and has been frozen.
The Equivalent Annual Rate (EAR) is used for overdrafts. It shows the effect of interest accruing on interest, in a situation where no repayments to the borrowing are made in a year. This allows you to compare rates across different organisations. The calculation does not include fees or other charges which are quoted separately.
Some mortgages carry an Early repayment charge in return for the benefits they offer. If your mortgage has an early repayment charge, you will be charged if you repay all or a large part of your mortgage early on, or if you choose to switch deals. Where there is no early repayment charge period or it has expired you can repay the mortgage in full or in part whenever you want.
Encryption is a method of protecting information by converting it into a form that can only be read by those with the correct ‘key’. It can also be used to ensure information came from an authentic source.
The process of securing assets, settling liabilities and distributing an estate after someone has died. If the deceased has made a Will, the executor will distribute the estate accordingly. Otherwise, the estate will be administered under the rules of intestacy.
A firewall is a hardware or software security system that monitors and controls access to and from network locations, such as the internet. It protects your devices by preventing unauthorised network access. Firewalls are often found integrated into Wi-Fi routers, smart phones and computers as well as being available to purchase as additional controls. You should always leave firewalls switched on and keep them updated with official manufacturer updates.
A fixed rate loan means the interest rate remains the same throughout the term of the loan.
Also known as the Footsie, it is an index, or average, of the share price performances of the 100 largest, and most actively traded, companies on the London Stock Exchange.
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Your gross annual income is the amount you receive each year before tax is deducted. If you receive a pension or other benefits you can add the total you would receive in one year and include this as your income.
Gross rate means that we will not deduct tax automatically from your interest. You are responsible for paying any tax due to HM Revenue and Customs.
A hacker is a person who uses a computer to break into other computer systems in order to steal, change or destroy information. To protect yourself from hackers you should install firewall software on your computer and keep it up-to-date. Popular Personal Firewall Software such as McAfee Internet Security Suite, Norton Internet Security, or Zone Alarm can help to protect your computer.
Hire purchase is a loan linked to buying something specific, such as a car. It’s a way of being able to use what you've bought before payment is completed once you sign the agreement you can drive the car away the same day.
The homeowner variable mortgage rate applies to mortgages applied for after 1st June 2010. If a change in the base rate means that we need to change the homeowner variable mortgage rate, this will be within 30 days of the change to the base rate.
Identity theft occurs when someone steals your personal information and uses it to impersonate you and commit fraud.
Inheritance is the process of passing on property, titles, debts, and obligations upon someone's death according to their will or the laws of intestacy.
An instant access savings account is an account with that gives you instant access to your funds when you need them. Interest is usually paid on the money in the account. Interest rates vary depending on balances.
The time period when interest is not being charged. For example, if your full balance is at 0%, or when you only use your credit card for retail purchases and pay it back in full and on time each statement.
Interest rates are what we use to calculate the cost to you of borrowing money (e.g. on a credit card), or what you will receive if you save money (e.g. in a savings account), so it can make sense to compare rates and shop around for the best ones. Interest is often expressed as a percentage rate.
Electronic, internet or E-banking is a way you can manage your account online using the Internet, rather than at a bank branch. You can view your account details online and make transactions e.g. pay bills or transfer funds using a secure method such as a password, PIN number or combination of both.
ISAs (Individual Savings Accounts) are savings and investment products where you don’t pay income tax on the interest you earn (or on the increase in value of your investment).
Loan to value is the proportion of the value or price of the property (whichever is the lowest), that you borrow on a mortgage. For example, a £90,000 mortgage on a house valued at £100,000 would mean a LTV of 90%.
Long-term credit helps you buy bigger items now instead of having to save up, for example a loan to buy a car. They are usually lower cost than short-term borrowing.
The first time you log onto Internet Banking you’re asked to select some memorable information. This will be a word, place or phrase that is easy for you to remember. Each time you log on you will be asked to provide three random characters from your memorable information.
A portable mortgage is one which allows you to move your mortgage deal from one property to another if you move home. This is important if you are taking advantage of a mortgage deal that comes with early repayment charges.
The rate of interest which would be payable after allowing for the deduction of income tax at the rate specified by law.
An Open Ended Investment Company (OEIC) can invest in, for example, shares in the stock market, fixed interest securities and money market instruments. It’s a type of fund where people can invest together and where the fund is divided into shares which can be bought or sold.
With an offset mortgage you can offset the balance in certain current accounts and savings accounts against the amount of your offset mortgage and you only pay interest on the difference.
An overdraft is when a customer borrows from the bank, usually through their current account, by arranging to take money or make a payment from the account which exceeds the money in the account. There are two kinds of overdraft: an arranged overdraft which a customer can set up in advance for a specific amount they know they need – like £500, and an unarranged overdraft, where the bank agrees to lend you money to cover payments you want to make, but for which you don’t have enough money. Using an unarranged overdraft can damage your credit score.
An overdraft extension is an increase in someone’s existing overdraft limit for a temporary or permanent length of time as agreed with the bank.
When the amount of money withdrawn from a bank account is greater than the amount actually available in the account, the excess is known as an overdraft. The Overdraft limit is the amount of money set up in agreement with your bank that you can overdraw on your account.
A Packaged Bank Account is a current account that offers additional features and benefits for a monthly fee. These benefits could include travel insurance, breakdown cover or mobile phone insurance. The benefits will depend on the package you choose.
A payment (sometimes called a bill payment) is a way of transferring money from your account to someone else's UK bank account. The recipient of the payment is sometimes called the 'beneficiary'. Payments can be made to either an individual or a business.
Payment Protection Cover can take care of your card payments if you are unable to work due to an accident, sickness or unemployment.
A Pension is a long-term investment that helps you save for your retirement in a tax-efficient way.
A Pension plan is an investment plan which can provide a lump sum and a retirement income.
A personal loan is a convenient way of borrowing money for almost any purpose, and fixed monthly repayments mean it's easy to budget your finances without having to worry about changes to interest rates.
Phishing scams are emails that may appear to be real, but they ask you to enter personal information or they have links to websites that may look genuine but aren’t. When you click on a link or enter your personal details, the information is sent to someone other than your bank or other service providers.
If you receive a phishing email, stay calm. There is no risk in receiving it. Just delete it. You can report it by forwarding it to email@example.com.
PrivacyGuard® is a fraud protection product that can cover you against problems that arise as a result of identity theft, providing expert help and support when you suspect you've fallen victim to fraud. The PrivacyGuard® team of identity fraud specialists will investigate any suspected fraudulent activity, and help you get your credit rating restored.
Lloyds Bank Private banking is an enhanced banking designed exclusively for you if you hold at least £250,000 worth of investable assets. As we act independently and aren't tied to any particular financial products, your objectives will be the focus of our recommendations.
QuickSign enables you to electronically sign your loan agreement online by entering your Internet Banking password which acts as your electronic signature.
Remortgaging is when you switch the mortgage you have on your home from one lender to another without moving home. Most of our mortgage range is available if you're switching your mortgage from another lender without moving home.
Repayment is where you pay back some of the capital and interest, usually monthly. The amount you owe gradually reduces each month.
Savings Bond is a savings product that offers fixed interest if you keep a fixed amount in the bond for a set period of time.
A secured loan is a loan that is backed by assets belonging to the borrower, normally your home. This reduces the risk for the lender and may enable the borrower to obtain better terms for the loan. However if the borrower fails to keep up repayments on the loan then the lender could seek to use the assets that the loan is secured against to repay the outstanding debt. An unsecured loan is not backed by any assets belonging to the borrower.
Short-term credit is used to help you through to pay day - for example an overdraft. It's usually higher cost than longer-term borrowing and should be kept to a minimum.
Shoulder surfing is a technique used by fraudsters to steal your PIN or other information by peering over your shoulder. Always be careful when accessing personal or sensitive information in public places, and shield your PIN whenever you enter it.
Site certificates form an essential part of providing reassurance to the customer that the site they are visiting is genuine. A site certificate shows you that a secure connection has been established and secure communication can take place. It will also demonstrate that you're not being tricked to enter your details on a fraudulent website.
A sort code is made up of six digits, grouped in pairs e.g. 00-00-00. The sort code for your account is displayed in Internet Banking and the Mobile Banking app and is shown on your statement.
Spam is unsolicited and unwanted email.
The standard variable mortgage rate applies to mortgages applied for before 1st June 2010. If a change in the base rate means that we need to change the standard variable mortgage rate, this will be within 30 days of the change to the base rate.
A standing order is an instruction you give to your bank to pay a fixed amount to someone else or to one of your own eligible Lloyds Bank accounts on a regular basis, for a set amount of time. The payments are taken from your account on agreed dates, usually monthly.
A summary list of all the transactions made and received on your account during a set time frame. Statements are typically available in a digital format online or through the post on a paper printout.
A stepped fixed rate means your mortgage payments stay low initially before gradually increasing.
Tax-free means you will not pay income tax on your interest.
The amount allowed to be invested in a cash ISA account which is free of income tax.
Term Deposit is when money is invested for a fixed period of time at a fixed rate of interest which applies for the duration of the term.
A text alert is a message sent to your mobile phone via SMS (short messaging service) from your bank.
A tracker mortgage means your rate will be set a certain fixed percentage above or below the Bank of England base rate. So when the Bank of England base rate changes, your rate will follow within one month of the change.
A transfer is a way of moving money between your own accounts in the same bank. If you want to pay some money to someone else's account, your own accounts in a different bank or to pay bills to companies you should make a payment rather than a transfer.
A virus is a computer program that can embed itself into other programs on your computer, and may cause damage to your files. Email is the most popular way to spread viruses. Opening an unknown email can trigger the spread of the virus onto your computer. Popular anti-virus software such as McAfee Virus Scan, Norton AntiVirus, or Sophos Anti-Virus can help protect your computer from the latest viruses.
Eligible deposits with us are protected by the Financial Services Compensation Scheme (FSCS). We are covered by the Financial Ombudsman Service (FOS).
Calls may be monitored or recorded to help us improve our quality of service.
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