Savings Glossary
AER
This stands for Annual Equivalent Rate and illustrates what the interest rate would be if interest was paid and compounded once each year. As every advertisement for a savings product which quotes an interest rate will contain an AER, you'll be able to compare more easily what return you can expect from your savings over time.
gross
This refers to a sum of money that represents an actual price, without reference to costs, discounts, yields or similar factors.
ISA
(Individual Savings Accounts) are tax exempt Government approved savings accounts.ISAs have been design to offer a range of investment options, and are made up of one or more components of investment depending on the type you choose.
Net
This refers to a sum of money that represents a price after any necessary deductions, working expenses or similar factors have been taken into account.
Pension Plan
An investment plan designed to provide a lump sum when you retire, and an income after retirement. A pension plan is sometimes used to provide a lump sum to repay the amount of money owed on an interest-only mortgage.
TESSA
This stands for Tax Exempt Special Savings Account, which is a savings scheme introduced by the government for anyone aged 18 or over. It provides tax-free interest after five years on a limited amount of investment. (No new TESSA's can be opened, however account transfers are accepted from other TESSA providers).
