Common Banking terms simplified

When you are looking for a loan, a bank account, a mortgage, and the like, it can all be confusing. With so many different terms being thrown around, trying to understand what finance option will be best for you is a lot harder than it needs to be. Here at Search My Credit we have constructed a small guide with the basic terminology translated so that you can understand the information on the banking sites.

Here, we have handpicked only a few key terms which crop up on this website the most:

APR – Annual Percentage Rate. This is the rate you are charged annually for borrowing credit.

APY – Annual Percentage Yield. This is the rate you gain interest on a deposit account, e.g. a savings account.

Bankrupt – If a person cannot repay their debts of over £5000 to schedule then they can declare bankruptcy, or someone else can declare it against them, having their debts cleared but also incurring many negative repercussions, such as a 6-year negative effect on your credit file.

Credit Reporting Agency – A Credit reporting agency collates all of your financial transactions into one file, summarising your interaction with credit to evaluate how trustworthy you are with borrowing. This file can be given to creditors or other clients, such as banks and other lenders.

Credit Score – A credit score is a number assigned to you and your financial history which dictates how reliable you are with borrowing. This score is used by banks and other lenders to evaluate whether you can be trusted financially.

Interest Rate – An amount paid by the borrower to lender in return for being allowed to borrow from them. This can be charged over a set period and can fluctuate depending on the lender.

Lender – A financial institution which can give out money to borrowers, charging interest on the loan until the money is paid back in full.