Confused by financial jargon? (Alamy/PA)
09 August 2021

Financial jargon-buster: Do you know what these money terms mean?

09 August 2021

Do you know your APRs from your CRAs? If some financial abbreviations or phrases leave you scratching your head, you’re not alone.

Shawbrook Bank found only a quarter (25%) of people know that APR stands for ‘annual percentage rate’, and less than a third (31%) understand what an unsecured loan is.

giphy.gifTo help people brush up on their money jargon skills, Paul Went, consumer managing director at Shawbrook Bank, has provided a simple guide…

1. APR (annual percentage rate)

When you borrow money from a lender, you’ll have an agreement to make repayments over an agreed period of time. The APR is the annual cost of taking out the loan, expressed as a percentage.

You can use it to compare products such as loans and credit cards and work out which is the most suitable deal for you.

2. Fixed and variable rates

Fixed rates will remain the same, perhaps for a certain period of time, but variable rates could go up or down. So whether it’s a loan or a savings product you’re taking out, check whether the rate is fixed or variable.

3. Credit check

A credit check or search, happens when a personal loan provider or credit card company contacts one or more of the main credit reference agencies (CRAs) to obtain details of your credit history. This happens after you apply for credit or other financial products that require a credit check.

It helps providers understand your financial behaviour. They will use this information along with other checks to decide whether your eligible for the credit you’re applying for. Missed payments, applying for credit too often, and even not being registered to vote, can affect how companies view you.

In some situations, lenders may carry out ‘soft’ credit checks to indicate your potential eligibility for a product. They won’t affect your credit score as they aren’t generally visible to companies, unlike ‘hard’ checks. This gives you the freedom to shop around.

4. Debt consolidation

This is the process of combining multiple debts, such as those on credit cards, overdrafts, or personal loans, into one. You may potentially be able to move all your debts onto a lower interest rate and it could also make it easier to keep track of payments, helping budgeting.

Shawbrook has an ‘ultimate guide to debt consolidation‘ on their website (

5. Unsecured loan

This is a form of credit that is not secured against the borrower’s property or any other assets. It means you don’t need to be a homeowner to apply.

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