Glossary of financial terms

A

• Annual Percentage Rate (APR): the overall cost of borrowing if you owe money on your credit card, loan or overdraft. The higher the APR the more interest you will pay

B

• Bankrupt: bankruptcy is a legal status that usually lasts for a year and is a way of clearing debts you can't pay. Sequestration is the Scottish legal term for bankruptcy. Bankruptcy has a number of consequences. One of these is that the person who has been declared bankrupt hands over the things they own and their financial assets to an appointed trustee, who then sells off whatever is not exempt to pay off the debts
• Benefits: you may be eligible to receive financial and other support from the State if you are on a low income or have certain costs to meet because of your personal situation

C

• ‘Cash in hand’: this is a method of payment usually for goods or services. By not declaring this income, people avoid paying tax, National Insurance or VAT. This is deemed as fraud (see ‘through the books’)
• Charity: this refers to ‘a good cause’ usually funded by contributions from individuals or groups of people
• Cash flow: cash flow is a business term that refers to the movement of money in and out of an organisation. However, a number of lenders use this as a basis for renewing or rolling over loans. The APR charged on these types of loan is usually very high
• Credit: buying on credit is a form of borrowing. It includes paying by credit card or store card, hire purchase, and other credit agreements including interest-free credit where you 'buy now, pay later'
• Credit card: a plastic card used instead of cash as a method of payment for goods and services. You buy, and then pay later when you receive a statement from the credit card provider showing what you owe. Any balance that is owed at the end of the month will have interest added. This can be a very expensive way to borrow money
• Co-op stamps: this was the way that dividends were paid through being a member of a not-for-profit organisation. These were seen as a loyalty payment, an idea picked up and developed by organisations such as Green Shield Stamps (withdrawn in 1991) and Tesco Clubcard and Boots Advantage Card

M

• Minimum wage: the UK has a national minimum wage that legally sets the minimum amount an individual can be paid for an hour’s work, which varies according to the worker’s age
• Money lenders: these can be legal or illegal. They are perceived to charge very high rates of interest. Often they link the loans and repayments to the individual’s ‘cash flow’
• ‘Menodge’: this is a type of savings club where each member contributes a fixed sum for a stated period (other spellings include ménage, monoge and minodge)

N

• National Insurance Contributions (NICs): you pay NICs from your earnings to qualify for certain social security benefits including the State Pension

O

• Odds: this is the term used to express the chances of winning a bet or staking a play on the lottery

R

• Rebate (income tax or council tax): this is a refund due to an individual having paid too much tax. The reason for this is usually changing financial circumstances or an administrative error
• Repossessed: if you buy your home with the help of a secured loan then the lender will usually protect their interest by registering a ‘legal charge’ against your house. This means that when the house is sold you will first have to repay the lender any money you have outstanding. If you do not keep up the repayments on the loan the lender can repossess your property. This means they can take over the property and sell it in order to pay back the loan
• Repayments: the amount you have to pay back to the lender (usually monthly) when you borrow money
• Rollover: takes place when the ‘jackpot’ is not won on the national lottery. A number of money lenders also ‘roll over’ small loans which are linked to an individual’s or household’s cash flow

S

• Savings: there are two ways to save – short term and long term. Savings accounts are for times when you may need to get at your money quickly. They’re different from investments, which are really for the longer term
• Share profits: in the story this refers to sharing the ‘kitty’ from the ‘menodge’. However some young people may be aware of different profit sharing procedures in businesses such as partnerships, limited companies (Ltd) and public limited companies (Plc)
• Student Loans: this is a financial service offered by the Student Loans Company (SLC) to over one million students annually, in colleges and universities across the four education systems of England, Northern Ireland, Scotland and Wales. Student loans are available to higher education students to help meet their living costs. There is interest charged on the amount you borrow but it is less than a bank or building society would charge you. You don't have to repay your loan until your income reaches a certain level, but beware interest keeps being added until you pay it all back

T

• Tax: a charge you pay to the government – there are different types of tax but income and inheritance tax are the ones most people are aware of. The other main tax people will be aware of is VAT (Value Added Tax) which is collected by various organisations and businesses and then paid to the government
• ‘Through the books’: this is a term used for ‘legitimate’ payments for goods and services that will be eligible for income tax, National Insurance or VAT (see ‘cash in hand’)

Y

• Young Scot Card: the Young Scot National Entitlement Card enables young people, aged 11–26, to access over 1,400 discounts and special offers in Scotland alone and many more in forty-two European countries. In addition, the Card offers cheaper public transport for young people aged sixteen, seventeen and eighteen. The PASS ‘proof of age’ hologram enables young people to use their card as valid proof of age across the UK