words, in plain words

Glossary

54 terms you keep seeing in the money news. The word of the day on the home page comes from this list.

APR: Short for Annual Percentage Rate: the total yearly cost of a loan, including interest and any fees, shown as a percentage. For the same amount over the same time, a lower APR means a cheaper loan, so it lets you compare loans fairly.
Asset: Anything you own that is worth money, like cash, shares or a house. For a company, it also includes things like its buildings and machines.
Balance sheet: A snapshot of a company on one date: what it owns (its assets), what it owes (its liabilities), and the difference, which belongs to its owners.
Bank Rate: The UK's main interest rate, set by the Bank of England. Interest is the fee for borrowing money, or the reward for saving it. When Bank Rate goes up, banks usually charge more for loans and pay more on savings, so people spend less and prices rise more slowly. Source: Bank of England
Bear market: A long period when share prices keep falling. The opposite is a bull market.
Bond: A loan to a government or a company that can be bought and sold. While you hold it, the borrower pays you interest, and at the end it repays the loan. UK government bonds are called gilts.
Budget: The Chancellor's statement to MPs on the government's plans for tax and spending. The Chancellor is the minister in charge of the country's money. On the same day, the Office for Budget Responsibility (OBR) publishes its forecast for the economy. Source: House of Commons Library
Budget deficit: When the government spends more in a year than it takes in from taxes and other income. It borrows to cover the gap, which adds to the national debt.
Bull market: A long period when share prices keep rising. The opposite is a bear market.
Buy now, pay later: A way to split the cost of something into smaller payments over time, without paying interest. Since 15 July 2026 the FCA, the UK's financial watchdog, regulates it when the lender is a different business from the shop. Source: Financial Conduct Authority
Cash flow: The money actually coming into and going out of a business over a period. It is not the same as profit: a business can be profitable on paper and still run out of cash if its customers pay late.
Central bank: The bank in charge of a country's money. It sets the main interest rate, which affects what other banks charge on loans and pay on savings. The UK's central bank is the Bank of England.
Compound interest: Earning interest on your interest. Interest is the extra money a bank pays you for saving: put in £100 at 5% a year and you have £105 after a year. In year two you earn 5% on £105, not just on £100, so you have £110.25.
CPI: Short for Consumer Prices Index. Every month, the Office for National Statistics (ONS) checks the prices of about 700 everyday items, like a giant shopping basket, and compares them with a year earlier. The result is CPI, the inflation rate the Bank of England tries to keep at 2%. Source: Bank of England
Credit file: A record of how you have handled borrowing, such as loans and credit cards. Lenders check it to decide whether to lend to you and how much to charge.
Diversification: Spreading your money across lots of different investments. If one does badly, the others can make up for it, so you are not relying on a single bet. It is the "don't put all your eggs in one basket" rule.
Dividend: Part of a company's profit paid out to its shareholders, the people who own its shares. It is usually paid as a set amount for each share you own.
Easy-access savings: A savings account you can take money out of whenever you want. The bank pays you interest for keeping your money there, but usually less than an account that locks your money away. Source: MoneyHelper
Exchange rate: The price of one currency in another. If £1 buys $1.30, that is the pound-to-dollar exchange rate, and it decides how much your money is worth when you spend it abroad.
FCA: Short for Financial Conduct Authority: the UK's watchdog for financial firms such as banks and lenders. It sets the standards they must meet and holds them to account if they don't. Source: Financial Conduct Authority
Financial Ombudsman Service: A free service, set up by Parliament, that settles complaints between people and financial businesses such as banks, lenders and insurers. Think of it as a referee. Source: Financial Ombudsman Service
Financial year: The 12 months the UK government uses for its accounts: April to March, not January to December. So "the first five months" of the financial year means April to August. Source: Office for National Statistics
Fixed-term savings: A savings account that locks your money away for a set time, usually six months to five years, at an interest rate agreed at the start. It usually pays more than easy-access savings, but taking money out early can cost you a penalty. Source: MoneyHelper
FTSE 100: A list of the 100 biggest companies on the London Stock Exchange, where shares in companies are bought and sold. When the news says "the FTSE rose", it means the value of these 100 companies went up overall.
GDP: Short for Gross Domestic Product: the total value of everything a country produces over a period, from goods like cars to services like haircuts. When GDP goes up, the economy is growing; when it goes down, the economy is shrinking.
Gilt: A loan to the UK government. When you buy a gilt, you are lending the government money; in return a conventional gilt pays you a fixed amount of interest, called the coupon, every six months, then repays the loan on a set date. Source: UK Debt Management Office Word of the week, Week of 21 September 2026
Index fund: A single investment that owns a small piece of every company on a list, called an index, such as the FTSE 100. Instead of trying to pick the winners, you own a little of all of them, so you do about as well as the list as a whole.
Inflation: How fast prices are rising. It covers goods, like food and TVs, and services, like haircuts and train tickets. If inflation is 3%, something that cost £10 a year ago costs about £10.30 now. Source: Bank of England
Inflation target: The rate of inflation the government has told the Bank of England to aim for: 2% a year, measured by CPI. It is 2% rather than 0% because if prices start falling, people may put off spending, and that can lead to businesses closing and people losing jobs. Source: Bank of England
ISA: Short for Individual Savings Account: a savings or investment account where you pay no tax on the interest or profits you make, up to a yearly limit. You must be 18 or over to open one. Source: GOV.UK
Liability: Anything you owe, like a loan or an unpaid bill. It is the opposite of an asset.
Liquidity: How quickly something can be turned into cash without losing value. Money in a bank account is very liquid because you can spend it straight away; a house is not, because selling it takes time.
Margin: How much of each pound from sales a company keeps as profit. Make £20 profit on £100 of sales and your margin is 20%: you keep 20p of every £1.
Market cap: Short for market capitalisation: what a company is worth on the stock market. Multiply the price of one share by the number of shares, so 1 million shares at £5 each gives a market cap of £5 million.
Monetary Policy Committee: The group of nine people at the Bank of England who vote on Bank Rate, the UK's main interest rate. Their decision affects what banks charge on loans and pay on savings. Source: Bank of England
Money mule: Someone who lets criminals use their bank account to receive money and pass it on. The money comes from crime, so helping move it is a crime too, and it can mean losing access to your bank account and being prosecuted. Source: Financial Conduct Authority Word of the week, Week of 28 September 2026
Mortgage: A loan to buy a home. You pay it back in regular amounts over many years, with interest, the fee for borrowing, added on.
National debt: Everything the government owes from all the borrowing it has done over the years and not yet paid back. Each year's budget deficit adds to it.
National Insurance: Money taken from your pay, like tax, from age 16 once you earn over a set amount a week. Paying it builds up your right to the State Pension, the money the government pays you when you are older, and to some benefits. Source: GOV.UK
Office for Budget Responsibility: An official body that forecasts how the UK economy and the government's money will do, usually twice a year. It also checks whether the government is on track to meet its own targets, and its forecast comes out on Budget day. Source: Office for Budget Responsibility
ONS: Short for Office for National Statistics, the UK's official statistics body. It collects facts and figures about the country. For example, every month it checks around 180,000 prices of about 700 items to work out CPI, which shows how fast prices are rising. Source: Bank of England
P/E ratio: Short for price-to-earnings ratio. Divide a company's share price by the profit it makes for each share. A P/E of 20 means you pay £20 for every £1 of yearly profit, which is roughly 20 years of today's profit.
Pension: Money you save while you work, to live on when you retire. With a workplace pension, your employer pays in too. Source: GOV.UK
Profit: The money left from sales after all the costs are paid. Sell a cake for £5 that cost £3 to make and your profit is £2.
Quantitative easing: A way for a central bank, like the Bank of England, to bring down long-term interest rates. It buys bonds, which are loans to governments or companies, and that pushes their prices up and long-term interest rates down. Source: Bank of England
Real return: What your savings really gain once rising prices are taken into account. If your account pays 4% but prices rise 3%, your money only buys about 1% more than before, so your real return is about 1%.
Recession: A period when the economy shrinks instead of growing. It shows up as GDP, the value of everything the country produces, falling.
Revenue: All the money a company takes in from selling things, before it pays any costs. Also called sales or turnover. Take away the costs and what is left is profit.
Share: A small piece of a company. If you own shares, you own part of the business, so you can make money if it grows or pays out some of its profit, and lose money if it does badly. Also called a stock or equity.
Short selling: Betting that a share price will fall. You borrow shares and sell them, planning to buy them back later at a lower price, return them and keep the difference. If the price rises instead, short sellers rush to buy back, which pushes it even higher: that is a short squeeze.
Spring week: A short insight programme at a bank or other finance firm, where first-year university students get to see what the job is really like.
Tax code: A code on your payslip, such as 1257L, that tells your employer how much you can earn before income tax is taken off. 1257L is the code for most people with one job. Source: GOV.UK
Volatility: How much and how fast a price moves up and down. A share that jumps 10% one day and falls 8% the next is very volatile; one that barely moves is not.
Yield: How much a bond pays you each year, as a percentage of what it costs to buy today. A bond paying £5 a year that costs £100 yields 5%; if its price rises to £125, the same £5 is only 4%. That is why bond prices and yields move in opposite directions.

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