UK Personal Finance Glossary

A plain-English guide to the UK savings, ISA, banking and borrowing terms you’ll meet on this site and on providers’ websites. Jump to a term, or skim the lot — each definition is short on purpose. Official rules are linked to their primary source (gov.uk, FSCS, Bank of England) so you can always check the detail yourself.

AER: Annual Equivalent Rate — shows what a savings rate would be over a year if interest were compounded and paid. It lets you compare accounts fairly regardless of how often they pay interest.
Gross rate: The interest rate before any tax is deducted. Most UK savings interest is now paid gross, with tax handled via your Personal Savings Allowance.
Easy-access account: A savings account that lets you pay in and withdraw money whenever you like, usually with a variable interest rate that can change at any time.
Fixed-rate bond: A savings account that locks your money away for a set term (e.g. 1 or 2 years) in exchange for a guaranteed interest rate. Early withdrawals are usually not allowed.
Notice account: A savings account that requires you to give a set notice period (e.g. 30, 60 or 90 days) before you can withdraw money without losing interest.
Cash ISA: An Individual Savings Account that lets you earn interest completely tax-free, up to the annual ISA allowance. Comes in easy-access, fixed and other varieties. See the official ISA rules on gov.uk.
ISA allowance: The maximum you can pay into ISAs each tax year (6 April to 5 April). For 2025/26 the allowance is £20,000 across all ISA types combined.
Personal Savings Allowance: The amount of savings interest you can earn tax-free outside an ISA each year — £1,000 for basic-rate taxpayers, £500 for higher-rate, and £0 for additional-rate taxpayers. See HMRC guidance.
FSCS protection: The Financial Services Compensation Scheme protects up to £85,000 per person, per banking licence, if an authorised UK bank or building society fails.
Bank of England base rate: The UK’s official interest rate, set by the Bank of England’s Monetary Policy Committee. It heavily influences the rates banks offer on savings and charge on borrowing. Current rate on the Bank of England website.
Regular saver: A savings account that pays a high headline rate but only on small monthly deposits (often £50–£500 a month), usually for a fixed 12-month term.
Flexible ISA: A type of ISA that lets you withdraw money and pay it back in the same tax year without it counting again towards your annual allowance.
Compound interest: Interest earned on both your original savings and on the interest already added, so a pot grows faster the longer it is left untouched.
Direct Debit: An instruction that lets a company collect variable or fixed payments from your bank account on agreed dates — often required to qualify for a bank switching bonus.
CASS: The Current Account Switch Service — the free, guaranteed UK service that moves your current account, including Direct Debits and standing orders, within seven working days.
APR: Annual Percentage Rate — the yearly cost of borrowing including interest and standard fees, used to compare credit cards, loans and overdrafts.
Overpayment: Paying more than your required monthly amount on a mortgage or loan, which reduces the balance and the total interest you pay over the term.
Offset account: A savings account linked to a mortgage where your savings balance reduces the mortgage interest you are charged, instead of earning interest itself.
Variable rate: An interest rate that can go up or down over time, typically tracking the Bank of England base rate or the provider’s own decisions.
Fixed rate: An interest rate that stays the same for a set period, giving certainty over what you will earn (on savings) or pay (on borrowing).

This glossary is for general information and is not financial advice. Tax rules and allowances can change — always check the current figures with the linked official source. Last reviewed July 2026 by Karl Johnson, Founder & Editor.