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 once each year.
Anti-virus 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. 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 a balance given by a bank will include payments that have been made to your account, but are not yet available because they haven’t cleared. This means that the money has not been received by the bank and is not available to spend. The money which has cleared and that you can spend is sometimes called your available funds or available balance.
A balance transfer is when you move an existing balance from one credit card to another.
Bank of England base rate
The Bank of England 'repurchase' or 'repo' rate which is the main factor influencing interest rate charges by lenders.
Bank sort code
Your bank sort code can be found on your cheque book/paying in book or statement. It is made up of 6 digits and grouped in pairs eg. 00-00-00.
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, so they are often requested when making large purchases. Usually, banks will charge a fee for issuing a banker’s draft.
The Banking Code is a voluntary code followed by banks and building societies in their relations with personal customers in the United Kingdom. It covers current accounts, personal loans, savings (including cash ISAs) and credit cards. The Business Banking Code covers small businesses with a turnover of up to £1 million a year. The Code sets standards of good banking practice, which are followed as a minimum by banks and building societies subscribing to it. It allows competition and market forces to operate to encourage higher standards of banking practice for the benefit of customers.
Lloyds Bank Bill Manager is a free bill management service that allows you to view, manage and pay your bills online through Internet Banking.
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
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.
Card Security Code
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 use your debit card to ‘buy’ cash when you are buying other goods or services. You can use this to get extra money which will be taken from your account at the same time as your purchase. This service is widely available in 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 £30 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.
Child Trust Fund
The Child Trust Fund was a government backed savings and investment account for children. Child Trust Funds are no longer available.
CHIP and PIN
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. This is more secure than just a signature which could be forged. For security, you shouldn’t write your PIN number down or tell it to another person.
Civil partnerships are a legal relationship which can be registered by two people of the same sex and give couples legal recognition for their relationship.
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.
Closing administration charge
The closing administration charge only applies when you repay your mortgage and may vary depending on your circumstances. In particular, it does not apply to mortgages entered into on or after 1 August 2007.
A credit card is 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.
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 agency
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 purchase 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 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.
Direct Debit Guarantee
The Direct Debit Guarantee scheme says that:
- If there is a change in the amount to be paid or the payment date, the person receiving the payment (the originator) must notify the customer in advance
- If the originator or the bank/building society makes an error, the customer is guaranteed a full and immediate refund of the amount paid
- Customers can cancel a Direct Debit at any time by writing to their bank or building society. This guarantee is offered by all banks and building societies that take part in the Direct Debit scheme
An account becomes dormant when a customer makes no transactions on the account for three years or more. Customers who have a dormant account won't receive statements or cards for the account.
EAR / Equivalent Annual Rate
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.
Early repayment charge
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 used to scramble information to protect it from those who aren’t authorised to access it.
A firewall is a piece of software or hardware that provides a protective barrier between your computer and the Internet. A firewall will prevent intruders or hackers from gaining access to your PC and should be updated regularly. Popular personal firewall software such as McAfee Internet Security Suite, Norton Internet Security, or Zone Alarm can help to protect your computer
Fixed rate loan
A fixed rate loan means the interest rate remains the same throughout the term of the loan.
The FTSE is an independent company owned by The Financial Times and the London Stock Exchange. The FTSE 100 is the index which tracks the top 100 UK companies.
Get Safe Online
This is a comprehensive source of comprehensive resource for independent expert security advice created with the National Hi-Tech Crime Unit and other leading businesses. The Get Safe Online website contains nearly 100 articles, including advice for small business owners and actions parents can take to ensure safe use of the internet.
Gross annual income
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 person who promises they will pay the borrower's debt, usually if the borrower fails to.
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.
Higher lending charge
A higher lending charge is a fee charged by a mortgage lender where the amount borrowed exceeds a given percentage of the property value.
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.
Identity theft occurs when someone steals your personal information and uses it to impersonate you and commit fraud.
Inheritance is the practice of passing on property, titles, debts, and obligations upon someone's death.
Instant access savings account
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.
Interest free period
The time period when interest is not being charged.
Interest is money paid for the use of money. You pay interest on money you borrow and you receive interest on money you save, 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).
When structured as an operating lease, this is a form of financing that avoids the down payment usually required for the purchase of equipment.
Legal tender varies by country – it is the money recognised in that country as valid payment to buy goods and services. In the UK, the legal tender is Pound Sterling.
A higher lending charge is a fee charged by a mortgage lender where the amount borrowed exceeds a given percentage of the property value.
Loan to value (LTV)
Loan to value is the proportion of the value or price of the property (whichever is the lower), 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.
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'. 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.
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.
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.
Packaged Bank Accounts
A Packaged Bank Accounts is a packaged current account that offers additional features and benefits at a discounted price for a monthly fee. These benefits typically include annual travel insurance, AA Breakdown Cover, mobile phone insurance, card protection, overdraft benefits and extra savings on your holidays. The benefits will depend on the package you choose to upgrade to.
The 'Participation Ratio' is the ratio used when we work out how much of the FTSE 100 Index's growth (if any) is returned upon the account maturing.
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
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 steady income given to a person (usually after retirement). Pensions are typically payments made in the form of a guaranteed annuity to a retired or disabled employee.
A Pension plan is an investment plan which can provide a lump sum and an income after retirement. A Pension plan is sometimes used as a way of providing a lump sum to repay the capital of an interest only mortgage.
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 firstname.lastname@example.org.
A podcast is a digital recording of a radio broadcast or similar program, made available on the Internet for downloading to a personal audio or video player.
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.
Scottish Widows Investment ISA
A Scottish Widows Investment ISA is a potentially tax-efficient 'wrapper' around an OEIC fund. It allows you to benefit from potential investment growth free from personal liability to UK income tax and capital gains tax.
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 or credit card. 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.
Your bank sort code can be found on your cheque book/paying in book or statement. It's made up of six digits and grouped in pairs eg. 00-00-00.
Spam is unsolicited and unwanted email.
Standard variable mortgage rate
The standard variable mortgage rate is guaranteed to be no more than 2% above the Bank of England base rate. If a change in the base rate means that we need to change the standard variable mortgage rate in order to fulfil the guarantee, then we will do so 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.
The rate of interest which would be payable after allowing for the deduction of income tax at the rate specified by law.
Stepped fixed rate mortgage
A stepped fixed rate means your mortgage payments stay low initially before gradually increasing.
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.
Travel Money Card access code
The Travel Money Card access code is a four digit code that you select when you apply for the card. You need this to access our telephone and online services. Remember not to share these details with anyone else.
Travel Money Card password
The Travel Money Card password can be a combination of letters and numbers of between 5 and 12 characters and is used to identify you when you use the telephone or online services. Remember not to share these details with anyone else.
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.
Yearly tax free savings allowance
The yearly tax free savings allowance is a treasury defined cash limit for tax free savings products.
Important legal information
Lloyds Bank plc. Registered office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales No. 2065. Lloyds Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 119278.
Eligible deposits with us are protected by the Financial Services Compensation Scheme (FSCS). We are covered by the Financial Ombudsman Service (FOS).
Telephone calls may be monitored or recorded in case we need to check we have carried out your instructions correctly and to help us improve our quality of service.
PhoneBank® is a registered trademark of Lloyds Bank plc.