Savings jargon buster

The Annual Equivalent Rate shows what the earnings on your savings would be if interest was paid and compounded once each year.
An ISA (Individual Savings Account) is a savings account that pays interest free from UK income tax.
The process of adding together your savings balance and the interest it has already earned and calculating the interest on the total sum.
An amount that you pay into a savings account.
Gross Interest
Interest that is paid without any tax being deducted by the Society.
Easy access accounts
These accounts allow you to withdraw all or part of your savings either immediately or at short notice (usually without incurring any loss of interest).
The income you receive on your savings.
Monthly interest
Where interest is paid on a monthly, rather than an annual basis.  the gross p.a. figure will be less than the AER to allow for compounding.
Minimum balance (or minimum operating balance)
The minimum balance is the lowest amount you need to maintain in a particular savings account.
Notice period
The amount of notice you are required to give before making a withdrawal.
Tax year
In the UK this runs from 6 April to 5 April every year.
Tiered interest rate
As your balance grows the interest rate applicable may increase to a higher rate.
Variable rate
A rate of interest that can go up or down throughout the lifetime of the savings account.

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