Account
An account is a record of your spending, payments, refunds, fees and interest for a particular period or purpose.
APR
APR stands for Annual Percentage Rate. It helps to compare the annual cost of borrowing money, including interest and any fees, between lenders and products. It is presented as a percentage of the amount borrowed. The higher the APR is, the more expensive it will be to pay back.
Arrears
The amount you owe on your account, which should have already been paid. For example, if you have missed a payment of £3, you will be in arrears by £3.
Arrears fee
An arrears fee (also called a Late Payment Fee) is a Default Fee which is applied to your account if you don’t make your monthly payment on time, don’t make your monthly payment at all, or you don’t make your monthly payment in full.
Bankruptcy
Bankruptcy is a formal process in which you are declared bankrupt by the Accountant in Bankruptcy or a court. It is called sequestration in Scotland.
You might be able to declare yourself bankrupt if you can't pay your debts and the amount you owe is more than the value of the things you own.
As well as applying for bankruptcy yourself, your creditors can apply to make you bankrupt, even if you don’t want them to. You must owe your creditors at least £5,000 for them to be able to make you bankrupt.
Bank Transfer
A bank transfer is when you make a payment directly from your bank usually by using internet or telephone banking. You use a person or company’s bank details and send the amount of money you choose to their account. This is usually the fastest way to make a payment but can take up to 3 to 5 working days to show on your loan or credit card account.
Borrower
A person who has taken a loan, store card or credit card from a lender.
Borrowing
When a person receives money, which must be paid back. This can be through a loan, store card or credit card.
Breathing Space
When a Lender agrees to not contact you for a short period of time, unless they have agreed to do so or are required to write to you by law. This is gives you time to get your finances back up to date, consider your options for repaying, or to get independent advice (see Debt advisor). It’s important to remember you still need to make your normal contractual payments during this period. Any missed payments will be noted on your credit file.
Claim
A claim (under section 75 of the CCA) is something you can raise with the lender (i.e., Ikano Bank) when there is a problem with the goods or services, you have bought using your loan, store card or credit card. The lender then talks with the retailer for the you, to try and resolve the issue, for example by getting a refund or compensation for you.
Complaint
A complaint is when you tell a lender you’re unhappy about a service or product provided by the lender. Most complaints should be resolved within 8 weeks as set out by the Financial Conduct authority.
Consumer Credit Act 1974 (CCA)
This is a law that covers most types of lending in the UK. It sets out rules on: How businesses can lend. How they collect money and what your rights are when you borrow.
Contractual Payment
This is a payment where the amount and how often it needs to be paid, has been set as part of your credit agreement. At Ikano Bank our contractual payments are normally monthly.
County Court Judgment (CCJ)
A County Court Judgment (CCJ) is a type of court order in England, Wales and Northern Ireland (may be referred to as a Decree in Scotland) that might be registered against a debtor if they fail to repay money they owe. If you receive a CCJ it will have a negative impact on your credit rating.
Credit Agreement
A credit agreement is a written agreement which is enforceable by law. It documents all the terms of a loan, store card or credit card.
Lenders always provide borrowers with a written credit agreement, and this will contain all the terms and conditions of the product. Such as the contractual payment amount and date, interest rate, credit limit, default fees etc.
Credit
Credit is where someone buys goods or services now, using money from a creditor, which they agree to pay for later.
Creditor
A creditor is another word for Lender. It is often used when people are in financial difficulties, to describe the companies they owe money to.
Credit card
A credit card is a plastic or virtual card which can be used by a borrower to pay for goods or services or to get money from a cash machine on credit. Credit cards are issued by Lenders. Credit cards can be used wherever they’re accepted, up to the credit limit on the card, the borrower usually has to pay at least the minimum contractual payment each month but can choose to pay off another larger amount or even the full outstanding balance if they prefer. Some transactions come with extra charges or interest, and these will be shown in the credit agreement.
Credit Limit
This is the most you can borrow on your account. For example, a store card may have a credit limit of £100, so you can only buy goods up to £100.
Credit Rating
A credit rating (also known as a credit score) is a number provided by the Credit Reference Agency (CRA) . It changes monthly based on if you’ve made payments on time, if you’ve missed any payments and if you’ve had any defaults. This is often used by lenders when checking you for a new product and may also impact the cost of getting further credit in the future.
Credit Reference Agency (CRA)
A credit reference agency collects information about your financial history and creates a credit report based on these details. These reports are made available to banks and lenders, to check before they lend money to people. You can get a copy of your report, by contacting a CRA. The 3 main CRAs are TransUnion, Experian, and Equifax. Their contact details are below:
Experian Ltd
experian.co.uk
Tel: 0344 481 0800
or 0800 013 8888
TransUnion
transunion.co.uk
Tel: 0330 024 7574
Equifax Ltd
equifax.co.uk
Tel: 0800 014 2955
Credit Report
This shows your credit history. It shows lenders how many credit products you have or have had up to the last 10 years and any applications you’ve made for credit. This report is held with credit reference agencies and is updated using information provided by lenders and other organisations such as the electoral roll and utilities. On the credit report will be a credit score/rating which is used by lenders to assess the risk in lending money to you. A credit score/rating can be damaged by defaults on the record.
Credit Score
See Credit Rating
Continuous Payment Authority (CPA)
A CPA is available on some debit & credit cards. It is an agreement between you and the lender to take specified amount of money from card on set dates as agreed. You can cancel a CPA and pay by other means if it is not suitable for you.
Debt
Amounts of money a person has borrowed which must be paid back. This can be through a loan, store card or credit card.
Debt advisors
If you’re worried about debt or maintaining your payments with a lender, then there are companies or charities who can help known as Debt Advisors. For example, Debt Advisors can give you free advice and help on coming to an agreement with a lender or lenders about how much you’re able to repay. We have details for these organisations and how to contact us, if you’re seeking help from them on our Financial Support page.
Debt Arrangement Scheme
The Debt Arrangement Scheme (DAS) is a scheme set up by the Scottish government. It is to help you pay back your debts without the threat of court action from the people you owe money to (creditors).
Debt Relief Order
A Debt Relief Order (DRO) is a formal insolvency solution for dealing with your debts, which may enable you to get most of the debts written off.
It is for people who owe £50,000 or less (£20,000 in Northern Ireland), who don’t own their own home, without much spare income and who don’t have many other assets or items of value.
Debtor
A debtor is another word for borrower. It is often used when people are in financial difficulties, to describe the person who owes money.
Default
If you default, you’ve failed to keep up with your contractual payments towards your credit agreement. This is marked on your credit file and will show for 6 years. This can make it harder to borrow money in the future. It may also make more difficult to get credit for things such as mobile phone contracts, renting a property or buying a house.
Defaults can also be applied if you enter into a Debt Relief Order (DRO), Individual Voluntary Arrangement (IVA) or receive a County Court Judgement (CCJ) against you.
Default Fee
A fee is a set amount you will be charged when you don’t stick to the terms of your credit agreement, such as missing a payment. A full list of all fees which Ikano charge can be found in the terms and conditions of your credit agreement.
Default Notice
This is a letter which is sent after a number of missed payments to inform customers they are behind with their payments and the account is about to default. The customer will be given 21 days from the date of the default notice to repay the missed payments, if they do not make the payment in time then the credit agreement will end, and a default will be recorded on their credit file.
Deferred Period
Some products such as loans, credit and store cards, may offer a set period of time, where payments don’t need to be made and interest isn’t added. This usually starts from the moment you sign your credit agreement for a loan or the day you make a purchase with a credit card or store card.
Direct Debit
This a payment which is taken (normally monthly) directly from your bank account. It is set up by the lender who receives the money. You must give your permission for this to be set up by the lender and it comes with certain rights under the Direct Debit Guarantee. For example, what happens if the payment falls on a Bank Holiday.
For a loan your Direct Debit will be a set amount taken each month. The amount will be shown in your credit agreement.
For Store cards and Credit cards the lender can allow you to choose from different options. These can be your minimum monthly payment, the full balance or a set amount.
Enforcement
The methods for recovering a debt that has been sued for successfully and judgment entered against the debtors. Examples include instructing bailiffs, charging orders, attachment of earnings and Third-Party Debt Orders.
FCA (Financial Conduct Authority)
The Financial Conduct Authority (FCA) is the financial services regulatory authority in the UK.
Final Payment
This is the last payment you will make to a credit agreement such as a loan. The final payment is sometimes a different amount from the other payments.
Finance
See Credit
Financial Ombudsman
The Financial Ombudsman is an independent body which provides a free and easy-to-use service that settles complaints between consumers and businesses that provide financial services (including lenders). They resolve disputes fairly and impartially and have the power to put things right. If you’re unhappy with the way that we have dealt with your complaint you can ask the Financial Ombudsman Service to investigate your complaint.
Financial Services
Financial services include products and services provided by banks and lenders as well as insurance.
Identity Verification
Identity verification is a process that compares the identity that a person claims to have with the supporting document or data they possess. Such as getting you to take a selfie to match you picture to your passport.
Individual Voluntary Arrangement
An IVA is a formal insolvency solution where a legally binding agreement is made between you and your creditors to pay back your debts over a period of time.
Insolvency
When you’re insolvent, you can no longer pay your debts when they’re due. There are different ways you can apply for insolvency such as an IVA, bankruptcy Either an individual or a business can be said to be insolvent.
Interest
This is the amount you pay to the lender on top of the amount you borrow for example on a store card you are charged interest on the balance. Interest is calculated as a percentage of the amount borrowed. If your loan is interest free, then interest won’t be added.
Interest rate
The interest rate you’re offered depends on many things, such as your credit rating, the finance provider (lender), and the term of the loan or the type of store card or credit card. An interest rate can be fixed, which means that it does not change, or variable which means that it can change in certain circumstances. Details of the interest rates that apply to your product can be found in your credit agreement.
Legally Obliged
This is where a person or business must do something (or not do something) for legal reasons. A legal obligation can be contained in a law or regulation, or in a legal document like a contract.
Lender
This is a person or business that loans money or gives credit. Ikano Bank is a lender.
Loan
A loan is a financial product where a lender provides you with a fixed amount of money, which they repay over a set amount of time, by making regular payments usually of equal amounts. Sometimes a lender provides a loan to pay for a particular purchase, such as a car or sofa, sometimes a customer is free to spend the loan however they like.
Late Payment Fee
A Late Payment Fee (also called an arrears fee) is a Default Fee which is applied to your account if you don’t make your monthly payment on time, don’t make your monthly payment at all, or you don’t make your monthly payment in full.
Minimum monthly repayment
Every store card and credit card has a minimum monthly repayment amount (this can also be called the contractual payment) set out in its terms and conditions (in the credit agreement). Which is usually a percentage of the total amount, plus any interest or fees charged. It’s calculated based on the latest monthly statement balance.
Your monthly statement will usually state the "minimum amount due" each month, which has to be paid. You must pay at least this amount by the due date, otherwise it may impact your credit rating and/or result in default fees being applied.
If you only pay back the minimum amount due, it will take longer to repay what you owe and cost more in interest. This can cause you to fall into persistent debt.
Nominated person
There are times when you may not feel able to or may not be able to, deal with your finances or maintain your accounts on your own. When this happens, you can choose someone to speak and act on your behalf. That person is your nominated person.
Overpayments
An overpayment is an extra payment that is paid, which is more than you are required to pay under the terms and conditions of your credit agreement. For example, you could make a large lump-sum payment, or you could pay back a higher amount each month than was originally agreed, to reduce the amount you owe quicker.
Payment arrangement
A payment arrangement is when you’re behind with your monthly payments and agree to pay back a set amount and a set time. This could be more or less than your normal monthly payment and could be paid weekly, fortnightly, or monthly.
Payment break
A payment break is when a finance provider (lender) can make it, so that you don’t need to make any payments for a short time. They will do this if you’re having problems paying your normal payments.
Payment history
Payment history is a record of all the payments you have made on your account.
Persistent Debt
This is where, over an 18-month period you have paid more in interest and charges than you have paid towards repaying the amount you have borrowed. The Financial Conduct Authority requires lenders to help people who are in persistent debt.
Priority Debts
Priority debts are debts that could cause you serious problems if you don’t do anything about them. For example, you could lose your home, have your energy supply cut off, lose essential goods or go to prison if you don't pay. Priority debts include things like rent arrears, mortgage or other secured loan arrears, council tax arrears and gas, water, or electricity bills. If you are struggling with priority debts it is good idea to get help.
Sequestration
See Bankruptcy
Specialist debt purchaser
This is a company that buys debt from lots of different companies, including Ikano bank. If your account is sold to one of these companies, then they will work with you to find an affordable solution that suits you. Ikano usually only sells an account to one of these companies if it has entered a defaulted state i.e., through missing payments and or entering an insolvency such as an IVA.
Standing Order
When you set up a standing order, you instruct your bank to allow the bank to make ongoing payments on your behalf to another bank account.
You set the amount to be paid and how often, which could be weekly, 4 weekly or month.
A standing order can only be cancelled by you through your bank account.
Statement
This is a record or “statement” of the spending, payments, refunds, fees, and interest for a particular amount of time such as monthly or yearly, depending on the type of account. Store cards and credit card accounts usually receive statements monthly and loans usually only receive annual (yearly) statements.
Store card
A card which can be used to buy goods on credit from a particular store or group of stores. They may include a range of payment options including (but not limited to) buy-now-pay-later and fixed-payment plans.
Sum owed
Sum owed is the amount of money owed which is yet to be paid. This can mean only the arrears on an account. Or if an account is going into default, it can mean the balance on the account.
Terms & Conditions
Your terms and conditions can include the accounts repayment period, the interest rate, fees that may be charged for certain transactions, penalty fees that might be charged, and any other special conditions that may apply.
Terminate
When a credit agreement comes to an end. The credit agreement gives details of how and when you can terminate your credit agreement and how and when the credit agreement can be terminated by the lender.
Trust deed
A Trust deed is a formal insolvency solution in Scotland, where a legally binding agreement is made between you and your creditors to pay back your debts over a period of time.
Working days
Are any day other than a Saturday, a Sunday, Christmas Day, Good Friday, or a day which is a bank holiday under the Banking and Financial Dealings Act 1971 in any part of the United Kingdom.
Ikano Bank is based in England and only observes the bank holidays for England and Wales.
