Current Account Jargon Buster

• AER

  Annual Equivalent Rate (AER) shows the interest rate that would be added to the money you have deposited if interested was paid on an annual basis. A higher AER rates means better returns on the money you have saved. AER is a calculation of the compound interest and any introductory rates to give consumers a more accurate figure they can use to compare different savings accounts.

• BACS

  Bankers Automated Clearing Services allows you to make payments directly from your account to any other UK bank account. This system processes direct debits, salary payments, standing orders etc.

• Cashback/Rewards

  Cashback current accounts will allow you to earn while spending money via direct debit or your debit card. Cashback is usually offered as a % of the money spent and is added as credit to your account or can be in the form of vouchers. Rewards can come in the form of airmiles, nectar points or clubcard points.

• Contactless Payment

  Tap your debit or credit card against a reader to quickly pay for good up to £30. No need to enter your pin number.

• Direct Debit

  Direct Debits authorises companies to take payments from your bank account on an agreed date each month. They are designed for regular payments that might otherwise be forgotten. Direct Debits come with a protection guarantee if any mistakes are made.

• Debit Card

  Debit Cards are used to make payments in person, over the phone or online. The amount paid is deducted from your account immediately so no interest can be charged by the bank (as with credit card payments).

• Fees

  Fees are charges imposed by your bank and can be for a range of different activities. Fee’s vary between banks and it is important to understand your banks’ fee structure to avoid any nasty surprises on your account. Fee’s can be charged for everyday transactions like withdrawing cash or issuing a check. Fees can also be charged if you try to make transactions/payments while you have insufficient funds in your account.

• Overdrafts

  Your account goes into overdraft when you spend more money than you have in the account. Most bank accounts allow for an overdraft but unless it is agreed in advance they will likely charge fees or interest for as long as the account is overdrawn.