A-Z financial terms glossary & jargon buster

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Cap-and-collar mortgage

A mortgage deal where the interest rate is variable (you usually pay the lender's standard variable rate) but guaranteed not to go above or below certain levels within a specified period of time. The cap is the maximum rate and the collar the minimum rate. For more on the different types of mortgages available see our guide.


The amount of money you originally invest or borrow.

Capital gain

Any profit you make on your original investment.

Capital loss

Any loss you make on your original investment.

Capital gains tax (CGT)

A tax you pay on the profit or gain you make when selling or disposing of an asset such as shares or property. For more on capital gains tax see our guide.

Capital risk

The risk that you will lose money on an investment.

Capital shares

Type of shares in an investment trust. Capital shares don't receive any income but when the investment trust is wound up all or most of the money from the investments goes to the holders of these shares. For more on investment trusts see our guide.

Capital units

Units in an investment fund which carry higher than normal charges.

Capitation schemes

Plans to help you pay for dental treatment. For more dental insurance see our guide.

Capped-rate mortgage

With this type of mortgage you pay the lender's standard variable rate (SVR) but if it goes above a certain amount your repayments are 'capped' at an upper limit. When the lender's SVR falls below this level, so do your repayments. For more on the types of mortgages available see our guide.

Car insurance

Annual insurance you have to buy if you have a car on the road.


Money you receive when you take out certain types of products such as a cashback mortgage. Cashback also refers to cash you withdraw from your bank account at a supermarket checkout when you use your debit card to pay for goods.

Cash card

Plastic card used to withdraw cash from your bank or savings account at a cash machine

Cash equivalent transfer value

A lump sum which represents the value of your pension rights in a pension scheme.

Cash individual savings account (ISA)

These tax-free savings accounts are offered by banks, building societies and National Savings & Investments. For more on cash ISAs see our guide.


See capital gains tax.


See Clearing House Automated Payments System.

Child trust fund

Government scheme to encourage long-term saving for children. Although no longer available to new investors, parents with children born on or after 1 September 2002 were given money to open a child trust fund (CTF) for their child. The CTF could be a simple savings account or invest in shares. For more on CTFs and saving and investing for children see our guide.

Chip and PIN

The aim of chip and PIN is to reduce credit and debit card fraud. When you pay for goods or services with your card you will be asked to put your card in a small machine and key in your four digit Personal Identification Number (PIN). Only you should know your PIN so this is a way of verifying that you are the real cardholder.

Clearing cycle

The time it takes for a cheque or cash paid into your bank or savings account to clear and be available for you to spend or withdraw.

Clearing House Automated Payments System (CHAPS)

An electronic way of transferring money overseas.

Combined benefit statement

Statement from your pension provider showing how much pension you should get from the scheme and from your state pension.

Commercial property

This is any property used for business purposes such as a factory, office block  or shopping centre. For more on investing in commercial property see our guide.


Payments to a salesperson or financial adviser by the organisation whose products they sell.

Company representative

A salesperson who works for a company and can advise, recommend and sell only that company's products.


Compounding is where the interest you earn on your savings or investment is added to your original investment and then earns interest itself. For more on compounding see our guide.

Consumer Price Index (CPI)

The CPI measures the cost of consumer goods such as food and services and can tell you how much prices have risen or fallen over a particular period of time. It is the main index used by the government to measure inflation. Unlike the Retail Price Index (RPI), which is the other main measure of inflation, the CPI does not include housing costs such as mortgage interest and Council Tax payments.

Contract note

A document to confirm you have insurance cover while your insurance certificate is being prepared. A contract note can also be a document confirming you have bought or sold shares or other investments.

Contracting out

Giving up all or part of your additional state pension and instead receiving a pension from a workplace or personal pension. For more on the types of pension available see our guide.

Convertible bonds

These are corporate bonds which can be converted into shares with the company that issued them at a later date. For more on corporate bonds see our guide.

Convertible term insurance

Term insurance which can be converted into an investment-type life insurance policy at a later date. For more on the different types of life insurance available see our guide.

Corporate bond

These are bonds issued by companies. Bondholders usually buy bonds in £100 units and receive a set amount of interest from the issuer twice a year. When a bond matures, the bondholder gets back the nominal value of the bond (the £100). Corporate bonds can be traded on the stockmarket. For more on corporate bonds see our guide.

Corporation tax

A tax on profits paid by companies and other organisations such as clubs and societies.


The interest paid on a gilt. For more on gilts and government bonds see our guide.


See Consumer Price Index.

Credit card

A plastic card you can use to pay for goods and services. You can pay off your credit card bill in instalments and are charged interest on any outstanding amount. For more on the different types of credit card and how to choose the right credit card see our guide.

Credit history

This is a record of how you have managed the repayments on any borrowing you have had in the past. Your credit history or rating is used by lenders to decide if they will lend to you and how much interest they will charge you. To find out how to check your credit rating see our guide.

Current account

A bank account to manage your everyday money. For more on the types of bank accounts available see our guide.

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