Money Terms in Plain English.
Terms marked UK are specific to the UK. A nation's name, like Scotland, means the rule only applies there.
C
- CAC 40
- France's main stock market index, of forty big Paris companies.
- In plain English:A list of forty of France's biggest companies. Its value going up or down is used to show how French shares are doing.
MoreLess about CAC 40
France's main stock market index, made of 40 of the biggest companies listed in Paris.
It includes big names in luxury goods, energy and banking, like LVMH and TotalEnergies.
For example: When luxury brands have a bad year, the CAC 40 often falls because they make up a big part of it.
- See also: Index
- CAGR (compound annual growth rate)
- The steady yearly growth rate that would give the same overall result.
- In plain English:If something grew unevenly over several years, CAGR is the steady growth each year that would have got to the same end point.
MoreLess about CAGR (compound annual growth rate)
The steady yearly growth rate that would take an investment from its starting value to its end value.
It smooths out the ups and downs in between, so you can compare investments over the same period.
For example: £10,000 growing to £16,289 over ten years is a CAGR of 5%, even if some years were up and some down.
- Candlestick chart
- A price chart showing the opening, closing, highest and lowest price for each period.
- In plain English:Each bar looks like a little candle. Its thick part shows where the price started and ended, and thin lines show how high and low it went.
MoreLess about Candlestick chart
Green or white usually means the price closed higher than it opened, and red or black means it closed lower.
Traders look for patterns in them, but past patterns don't reliably show where a price goes next.
For example: A share opens at £10, rises to £10.50, drops to £9.80 and closes at £10.30. That day's candle is green, with thin lines above and below.
- Cap rate (capitalisation rate)
- A property's yearly rent after running costs, as a share of its value.
- In plain English:The rent a property brings in each year, minus running costs, compared with what it's worth. It helps compare property deals.
MoreLess about Cap rate (capitalisation rate)
It's mostly used for commercial property and in the US, and it's close to what UK landlords call net rental yield.
For example: An office worth £1 million brings in £60,000 a year after costs, so its cap rate is 6%.
- See also: Rental yield
- Capex (capital expenditure)
- What a business spends on things it will use for years, like machines or vans.
- In plain English:Money a business spends on things it will use for years, like buildings, vans or machines, rather than everyday costs.
MoreLess about Capex (capital expenditure)
What a business spends on things it will use for years, like buildings, machines, vans or computers, rather than day-to-day costs.
It's spread over the years in the accounts, and some of it can get capital allowances for tax.
For example: A bakery buying a new oven for £15,000 counts it as capex, while the flour it uses each week is a running cost.
- See also: Capital allowances
- Capital allowancesUK
- Tax relief on what a business spends on equipment and vehicles.
- In plain English:When a business buys equipment, vans or machines, it can take some or all of the cost off its profit, so it pays less tax.
MoreLess about Capital allowances
Tax relief on what a business spends on equipment, machinery and vans, taken off its profit.
The Annual Investment Allowance lets most businesses take off the full cost in the year they buy it, up to a yearly limit.
For example: A sole trader buys a £2,000 laptop for work and takes the full cost off that year's profit.
- Article inside Foliopeak: Depreciation and Capital Allowances: How Equipment Comes Off Your Tax
- Capital buffer
- The extra cushion of its own money a bank must hold to absorb losses.
- In plain English:A bank has to keep some spare money of its own, so that if it loses a lot, it can take the hit without going bust.
MoreLess about Capital buffer
It is made of the owners' money, not savers' deposits, so losses fall on the bank's shareholders first. The banks that matter most to the system must hold more.
For example: When the pandemic hit in 2020, the Bank of England cut one of these buffers to zero so banks could keep lending to businesses.
- Article inside Foliopeak: Systemic Risk
- Capital Gains Tax (CGT)UK
- Tax on the profit when you sell something that has gone up in value.
- In plain English:When you sell something like shares or a second home for more than you paid, you may pay tax on the profit. Your main home is usually free of it.
MoreLess about Capital Gains Tax (CGT)
Tax on the gain when you sell or give away something that has risen in value, like shares or a second home. Your main home is usually free of it.
Gains above the yearly tax-free amount are taxed at 18% where they fall in the basic-rate band and 24% above it.
For example: Sell shares for a £10,000 profit and the first £3,000 is tax-free. If the rest falls in the basic rate band, 18% on the other £7,000 is £1,260.
Figures checked 11 November 2026. Source: gov.uk (opens in a new tab)
- Article inside Foliopeak: Capital Gains & Dividend Allowances
- Capital gains tax exempt amountUK
- The profit you can make each year before Capital Gains Tax is due.
- In plain English:Each year, you can make a certain amount of profit from selling things before you pay any Capital Gains Tax on it.
MoreLess about Capital gains tax exempt amount
The gains you can make in a tax year before Capital Gains Tax is due: £3,000.
Gains inside an ISA or pension don't count, and any room you don't use doesn't carry forward.
For example: Someone selling shares at a gain smaller than the exempt amount pays no tax and doesn't need to report it.
Figures checked 11 November 2026. Source: gov.uk (opens in a new tab)
- Article inside Foliopeak: Capital Gains & Dividend Allowances
- Capital growth
- A rise in the value of an investment itself.
- In plain English:When an investment itself becomes worth more, like a share price going up, rather than paying you income.
MoreLess about Capital growth
A rise in the value of an investment itself, rather than the income it pays.
The two together, growth and income, are its total return.
For example: A share bought for £10 that's now worth £13 has £3 of capital growth.
- Article inside Foliopeak: Money You Put In, and Money It Made
- Capital lossesUK
- Losses on selling things, which can cut your tax on gains.
- In plain English:If you sell something for less than you paid, you can use that loss to cut the tax on your gains, now or in later years.
MoreLess about Capital losses
A loss made selling or giving away something for less than it cost.
For Capital Gains Tax, losses come off gains in the same year, and unused ones can be carried forward if you report them to HMRC within four years.
For example: Someone makes a £5,000 gain on one share and a £2,000 loss on another, so only £3,000 counts as a gain.
- Article inside Foliopeak: Using Capital Losses to Cut Capital Gains Tax
- Car finance compensationUK
- A scheme paying back people whose car finance had hidden dealer commission.
- In plain English:Some car finance deals had a hidden commission for the dealer that pushed up your interest. A scheme is paying some of that money back.
MoreLess about Car finance compensation
An FCA scheme for car finance deals made between 2007 and 2024 where the dealer was paid commission that wasn't properly explained.
Lenders must contact people who may be owed money, and claiming is free without a claims firm.
For example: Someone who bought a car on finance in 2015 gets a letter from the lender offering money back for hidden commission.
- Carbon credits
- Permits for greenhouse gas that companies can buy and trade.
- In plain English:Each credit lets a company release a set amount of greenhouse gas. Companies that pollute less can sell their spare credits.
MoreLess about Carbon credits
Permits or certificates for a set amount of greenhouse gas. Big polluters in the UK must hold permits for what they emit, and can trade them.
Voluntary credits are bought to balance out emissions, and their quality varies a lot.
For example: An airline buys credits to say it has offset a flight's emissions, but critics question whether the projects really cut that much.
- See also: Greenwashing
- Card skimming
- Criminals copying card details with a hidden device on a cash machine or card reader.
- In plain English:Criminals fit a hidden device to a cash machine or card reader that copies your card details. Cover your PIN and check the machine.
MoreLess about Card skimming
Criminals fit a hidden device to a cash machine or card reader to copy card details, often with a tiny camera to catch the PIN.
Cover your hand when typing your PIN, and tell your bank straight away if you see payments you don't recognise.
For example: Someone notices the card slot on a cash machine looks loose and bulky, uses a different machine and reports it.
- Care funding means testApplies in England
- How the council decides how much you pay towards your care.
- In plain English:The council looks at your income, savings and sometimes your home to decide how much of your care costs you pay yourself.
MoreLess about Care funding means test
How councils in England decide who pays for care. Someone with savings and assets over £23,250 usually pays it all, and below £14,250 pays only from their income.
A home isn't counted for care at home, or while a partner still lives there.
For example: A widow moving into a care home, whose house is empty, will usually have it counted, so she pays her own fees.
- Carer's AllowanceApplies in England, Wales, Northern Ireland
- Weekly money for someone who spends a lot of time caring for another person.
- In plain English:If you care for someone for at least thirty-five hours a week and earn below a limit, you can get this weekly money.
MoreLess about Carer's Allowance
A weekly benefit for someone who spends at least 35 hours a week caring for a person who gets certain disability benefits.
The carer's own earnings must be under a limit, and it can affect the benefits of the person being cared for.
For example: A daughter who cares for her disabled mother most of the week, and works only a few hours, can claim Carer's Allowance.
- Carer's CreditUK
- A National Insurance credit for carers that protects their State Pension.
- In plain English:If you care for someone for many hours a week, you can get National Insurance credits, so there are no gaps in your State Pension.
MoreLess about Carer's Credit
A National Insurance credit for people who care for someone for at least 20 hours a week but don't get Carer's Allowance.
It fills the gap in your record, so caring doesn't cost you State Pension.
For example: A man who looks after his father three days a week claims Carer's Credit, so those years still count for his State Pension.
- Article inside Foliopeak: The State Pension, and Your National Insurance Record
- Carry forwardUK
- Using pension allowance you didn't use in the last few years.
- In plain English:If you didn't use all your pension allowance in the last three years, you can use what's left this year to pay in more with tax relief.
MoreLess about Carry forward
If you've used this year's pension annual allowance, you can use any allowance left unused in the three previous tax years.
You must have belonged to a registered pension scheme in those years, and you still can't get tax relief on more than you earn.
For example: If you paid nothing into pensions for the last three years but were a member of a scheme, you could pay in more than one year's £60,000 this year, as long as you earn enough.
Figures checked 11 November 2026. Source: gov.uk (opens in a new tab)
- Article inside Foliopeak: The Pension Annual Allowance Taper
- Cash advance
- Taking cash out on a credit card, which is usually expensive.
- In plain English:Taking cash out with a credit card. You usually pay a fee and a higher interest rate from that day, with no interest-free time.
MoreLess about Cash advance
Taking cash out on a credit card, or using it for things like gambling or buying foreign currency.
It usually costs a fee and a higher interest rate, with interest from the day you take it.
For example: Someone takes £200 out of a cash machine with their credit card and pays a fee plus interest from that day.
- Cash basisUK
- Counting business money when it actually comes in and goes out.
- In plain English:You only count money when it actually lands in or leaves your bank, not when you send or get a bill. It's simpler for small businesses.
MoreLess about Cash basis
Counting business income when money comes in and expenses when they're paid, rather than when they're invoiced.
It's been the default for sole traders since April 2024, because it's simpler.
For example: A gardener invoices in March and gets paid in April. On the cash basis, it counts as April's income.
- Article inside Foliopeak: Being a Sole Trader, in Plain English
- Cash flow
- The money coming in and going out over a period.
- In plain English:The money coming into and going out of your account. Even a profitable business can run out of cash if customers pay late.
MoreLess about Cash flow
Positive cash flow means more comes in than goes out. A business can be profitable and still run out of cash.
For example: A builder finishes three jobs but the customers pay late, so he struggles to pay for materials for the next job.
- Cash flow statement
- The part of a company's accounts showing the cash that came in and went out.
- In plain English:Part of a company's accounts that shows where its cash came from and where it went over the year.
MoreLess about Cash flow statement
The part of a company's accounts showing the cash that actually came in and went out over the year, from the business, from investing and from borrowing or paying shareholders.
A company can show a profit and still run short of cash.
For example: A fast-growing company shows a profit, but its cash flow statement reveals it spent more cash than it took in.
- See also: Cash flow
- Cash ISAUK
- A savings account where the interest is tax-free.
- In plain English:A savings account where you don't pay any tax on the interest. You can put in up to a yearly limit.
MoreLess about Cash ISA
An ISA that holds cash savings, so the interest is free of tax.
The whole £20,000 ISA allowance can go into Cash ISAs, at any age from 18.
For example: £10,000 earning 4% makes £400 a year in interest, all of it tax-free.
Figures checked 11 November 2026. Source: gov.uk (opens in a new tab)
- Article inside Foliopeak: ISAs: Stocks & Shares, Cash, Lifetime, and Innovative Finance
- Cashback
- Money paid back to you when you spend, from a card, a bank or a shop.
- In plain English:When you buy something, you get a small part of what you paid back, from your card, bank or a shopping site.
MoreLess about Cashback
Money paid back to you when you spend, from a credit card, a bank account, a shop or a cashback website.
A cashback card is only worth it if you clear the balance each month, as interest soon costs more than the cashback. It also means getting cash at a shop till when you pay by debit card.
For example: A card pays 1% cashback, so £1,000 of shopping earns £10, as long as the bill is paid in full.
- Article inside Foliopeak: Credit Cards and Borrowing: What It Really Costs
- Cashflow planning
- Working out year by year whether your money will last the rest of your life.
- In plain English:Mapping out your money coming in and going out, year by year, into the future, to see if it will last as long as you need.
MoreLess about Cashflow planning
Working out year by year what money will come in and go out over the rest of your life, to see whether savings and pensions will last.
Advisers often show it as a chart, but it rests on guesses about growth, inflation and how long you'll live.
For example: A couple in their fifties use a cashflow plan to see whether they can retire at 60 and still have money left at 95.
- CCJ (County Court Judgment)Applies in England, Wales
- A court order to repay a debt, which harms your credit record.
- In plain English:If you don't pay a debt, a court can order you to pay. This stays on your credit file for six years unless you pay quickly.
MoreLess about CCJ (County Court Judgment)
A court order in England and Wales to repay a debt.
If it isn't paid in full within a month, it stays on a public register and on your credit file for six years.
For example: Someone ignores letters about an unpaid bill, gets a CCJ, and then finds it hard to get a mortgage.
- Article inside Foliopeak: Debt Help: Free Advice and the Formal Options
- CFD (contract for difference)
- A risky bet on a price moving, made with borrowed money.
- In plain English:A bet on whether a price will rise or fall, using borrowed money. You can lose much more than you put in, and most people lose.
MoreLess about CFD (contract for difference)
A contract that pays out the change in an asset's price without you owning it, usually with borrowed money.
Borrowing makes losses as well as gains bigger, and most CFD accounts held by ordinary investors lose money.
For example: Someone bets on a share rising using a CFD. The share falls 10%, and because they borrowed, they lose half their stake.
- Article inside Foliopeak: Leverage - Borrowing to Invest
- CHAPSUK
- The UK's same-day system for large payments, such as buying a house.
- In plain English:A payment system for large sums that arrive the same day, like when buying a house. Banks often charge a fee for it.
MoreLess about CHAPS
The UK's same-day system for large payments, often used to complete a house purchase.
Banks usually charge for sending one.
For example: On completion day, the buyer's solicitor sends the money to the seller's solicitor by CHAPS so it arrives that day.
- Article inside Foliopeak: How Money Moves: Faster Payments, Bacs and CHAPS
- Chapter 11 (US bankruptcy)
- A US bankruptcy process that lets a company keep trading while it sorts out its debts.
- In plain English:A US law that lets a struggling company keep running while it works out a plan to pay back what it owes.
MoreLess about Chapter 11 (US bankruptcy)
A US bankruptcy process that lets a company keep trading while it reorganises its debts under court protection.
Shareholders often lose most or all of their money. Chapter 7 closes a company and sells what it owns instead.
For example: An American airline files for Chapter 11, keeps flying, and cuts its debts, but its old shares become almost worthless.
- See also: Liquidation
- Chargeable lifetime transferUK
- A gift into most trusts, which can bring Inheritance Tax straight away.
- In plain English:Putting money into most kinds of trust while you're alive. If it's over a set amount, Inheritance Tax can be due straight away.
MoreLess about Chargeable lifetime transfer
A gift into most trusts while you're alive.
Inheritance Tax can be due at once, at half the rate charged on death, on the part above the tax-free nil-rate band.
For example: A father puts a large sum into a discretionary trust for his grandchildren, and tax is due on the part above the nil-rate band.
- Article inside Foliopeak: The Seven-Year Rule and Gifting to Children
- Chargeback
- Asking your card provider to reverse a payment when something goes wrong.
- In plain English:If you paid by card and something went wrong, like goods never arriving, your card provider can try to get your money back.
MoreLess about Chargeback
Asking your card provider to reverse a payment when goods or services don't arrive or aren't as described.
It's a card scheme rule rather than a law, and works for debit as well as credit cards.
For example: Someone pays by debit card for a sofa that never arrives, and the shop stops answering. Their bank reverses the payment.
- Article inside Foliopeak: Credit Cards and Borrowing: What It Really Costs
- Charging orderUK
- A court order that secures a debt on your home.
- In plain English:A court can attach a debt to your home. When the home is sold, the debt gets paid from the money first.
MoreLess about Charging order
A court order that secures an unpaid debt, like a CCJ, on your home, so it's paid when the home is sold.
In some cases the person owed can ask the court to order a sale.
For example: Someone with an unpaid CCJ finds a charging order on their house, so the debt will be paid from the sale.
- Charity rate (Inheritance Tax)UK
- A lower rate of Inheritance Tax when you leave enough to charity.
- In plain English:If you leave at least a set share of your estate to charity, the rest of your estate pays a lower rate of Inheritance Tax.
MoreLess about Charity rate (Inheritance Tax)
Inheritance Tax at 36% rather than 40% on some of an estate, when 10% or more of its net value is left to charity in a will.
It can mean the family gets nearly as much, while the charity gets a gift.
For example: Someone leaving a large estate adds a gift to charity in their will, so the rest is taxed at the lower rate.
- Article inside Foliopeak: Inheritance Tax Basics
- ChattelsUK
- Personal belongings such as jewellery or paintings, which have their own tax rules.
- In plain English:Personal things you can move, like jewellery, antiques or paintings. If you sell one, there are special Capital Gains Tax rules.
MoreLess about Chattels
Personal possessions you can move, like jewellery, paintings or antiques.
For Capital Gains Tax, one sold for £6,000 or less is exempt, and cars are exempt whatever they sell for.
For example: Someone sells a painting they inherited for a little under the limit and pays no Capital Gains Tax.
Figures checked 11 November 2026. Source: gov.uk (opens in a new tab)
- Article inside Foliopeak: Capital Gains & Dividend Allowances
- Cheque clearingUK
- How long it takes for money from a cheque to reach your account.
- In plain English:After you pay in a cheque, it takes a short while before the money is fully in your account and safe to spend.
MoreLess about Cheque clearing
UK cheques are now cleared from a photo, so money paid in on a working day is usually there by the end of the next working day.
For example: Someone pays in a birthday cheque with their banking app on Monday, and the money is ready to spend on Tuesday.
- Article inside Foliopeak: How Money Moves: Faster Payments, Bacs and CHAPS
- Child BenefitUK
- Regular money from the government for anyone bringing up a child.
- In plain English:Money the government pays to people bringing up a child. If you or your partner earn a lot, some or all of it may be taken back through tax.
MoreLess about Child Benefit
A weekly payment to someone bringing up a child: £27.05 for the eldest or only child and £17.90 for each other child.
The High Income Child Benefit Charge takes it back from higher earners. Claiming also protects a parent's State Pension if they're not working.
For example: £27.05 a week for the eldest child and £17.90 a week for each other child.
Figures checked 11 November 2026. Source: gov.uk (opens in a new tab)
- Article inside Foliopeak: Child Benefit, and the Charge That Takes It Back
- Child maintenance
- Money a parent who lives apart from their child pays towards the child's costs.
- In plain English:When parents live apart, the parent who doesn't live with the child usually pays the other parent towards the child's costs.
MoreLess about Child maintenance
Regular money a parent who doesn't live with their child pays towards the child's costs.
Parents can agree it themselves, or the Child Maintenance Service can work it out and collect it.
For example: After separating, two parents agree a monthly amount between themselves without using the Child Maintenance Service.
- Child Trust FundUK
- A tax-free savings account the government opened for children born in the early two thousands.
- In plain English:A tax-free savings account the government started for children born in the early two thousands. Many lie forgotten.
MoreLess about Child Trust Fund
A tax-free account the government opened for children born between 1 September 2002 and 2 January 2011, before the Junior ISA replaced it.
The money is the child's, and can be taken out from 18. Many have been forgotten, and can be traced through HMRC.
For example: A 19-year-old finds out from HMRC that she has an old Child Trust Fund worth over £1,000.
- Article inside Foliopeak: Child Trust Funds, and What Happens When a Junior ISA Turns 18
- Children's savings account
- A savings account opened in a child's name.
- In plain English:A savings account in a child's name. Interest is usually tax-free for the child, with some rules if parents give the money.
MoreLess about Children's savings account
A savings account in a child's name, often opened by a parent or grandparent.
If money a parent gave earns more than a small amount of interest a year, the interest is taxed as the parent's. Money from grandparents doesn't have this rule.
For example: A grandmother saves for her grandson in a children's account, and all the interest is his, tax-free.
- Article inside Foliopeak: Children's Money Beyond the Junior ISA
- Circuit breaker (trading halt)
- An automatic pause in trading when prices fall too far too fast.
- In plain English:If a stock market falls very fast, trading stops for a short while to give people time to calm down.
MoreLess about Circuit breaker (trading halt)
An automatic pause in trading when prices fall too far too fast, to give people time to calm down.
The US market pauses for the whole market, and the London Stock Exchange pauses single shares.
For example: In March 2020, US trading paused several times in a few days as prices crashed at the start of the pandemic.
- See also: Volatility
- Class 1A National InsuranceUK
- National Insurance an employer pays on benefits it gives staff, such as a company car.
- In plain English:When an employer gives staff perks like a company car, the employer pays this National Insurance on the value of the perk.
MoreLess about Class 1A National Insurance
National Insurance an employer pays on most benefits it gives staff, like a company car or private medical insurance.
It's paid once a year, after the benefits are reported to HMRC. The employee doesn't pay it.
For example: A company that gives its staff private health cover pays Class 1A National Insurance on its value each July.
- Article inside Foliopeak: Bonuses, Overtime and Benefits: What Lands in Your Pay
- Class 2 and Class 4 National InsuranceUK
- The National Insurance that self-employed people pay on their profits.
- In plain English:When you're self-employed, you pay National Insurance on your profits through your tax return. It counts towards your State Pension.
MoreLess about Class 2 and Class 4 National Insurance
What the self-employed pay on their profits. Class 4 is 6% between £12,570 and £50,270, and 2% above.
Since April 2024 nobody has to pay Class 2. Profits of £7,105 or more earn a qualifying year for free, and below that, paying £3.65 a week is voluntary.
For example: A self-employed decorator pays Class 4 on her profits through her tax return, and the year counts towards her State Pension.
Figures checked 11 November 2026. Source: gov.uk (opens in a new tab)
- Article inside Foliopeak: Class 2 and Class 4 National Insurance, Since the 2024 ChangeCalculator: Sole Trader Tax Calculator
- Clearing house
- A go-between that makes sure both sides of a trade get what they're owed.
- In plain English:When you buy shares, a clearing house sits in the middle to make sure the seller gets paid and you get your shares.
MoreLess about Clearing house
A go-between that stands between the buyer and seller in a trade, making sure each gets what they're owed even if the other fails.
It's a big part of how shares, bonds and futures are settled safely.
For example: When a broker goes bust in the middle of trades, the clearing house steps in so the other side still gets paid.
- See also: Settlement (T+2 and T+1)
- Clone firm
- A scam that copies the name and details of a real financial firm.
- In plain English:Scammers copy the name, address and registration number of a real firm to look genuine. Always contact a firm using details from the FCA register.
MoreLess about Clone firm
A scam that copies the name and details of a real FCA-authorised firm, so it looks genuine.
The FCA register gives the real firm's contact details, so always contact a firm using those.
For example: Someone gets an email from what looks like a real investment firm. They check the FCA register and find the phone number is different.
- Article inside Foliopeak: Spotting an Investment Scam
- Closed-ended and open-ended funds
- Funds that either have a fixed number of shares or grow and shrink as money comes and goes.
- In plain English:An open-ended fund creates new shares when people invest and cancels them when they leave. A closed-ended fund has a fixed number of shares that people trade.
MoreLess about Closed-ended and open-ended funds
An open-ended fund, like an OEIC or unit trust, creates and cancels units as money comes and goes, priced at the value of what it holds.
A closed-ended fund, like an investment trust, has a set number of shares traded on a stock exchange, so its price can differ from that value.
For example: An investment trust's shares trade at 90p while what it holds is worth £1 a share, so buyers get it at a discount.
- Article inside Foliopeak: Funds: ETFs, Index Trackers, and OEICs
- Codicil
- A document that makes a small change to a will.
- In plain English:A separate signed paper that changes a small part of your will, like adding a gift, without rewriting the whole thing.
MoreLess about Codicil
A document that makes a small change to an existing will, like adding a gift.
It must be signed and witnessed in the same way as the will itself.
For example: A man adds a codicil to leave his watch to his grandson, without rewriting his whole will.
- Article inside Foliopeak: Wills and Lasting Powers of Attorney: Who Inherits, and Who Acts for You
- Cold Weather PaymentApplies in England, Wales
- Extra money for people on some benefits during very cold spells.
- In plain English:If you get certain benefits and it's very cold where you live for seven days in a row, you get an extra payment.
MoreLess about Cold Weather Payment
A payment in England and Wales for people on certain benefits, like Pension Credit, for each spell of seven days below freezing where they live.
Scotland has a yearly Winter Heating Payment instead.
For example: During a week of freezing weather, a pensioner on Pension Credit gets an extra payment without having to claim.
- Collectibles
- Things like art, wine or watches bought partly hoping they rise in value.
- In plain English:Things like art, wine, watches or stamps that some people buy hoping they'll rise in value. They can be hard to sell and pay no income.
MoreLess about Collectibles
Things bought partly hoping they'll rise in value, like art, wine, watches and classic cars.
They pay no income, cost money to store and insure, and can be hard to sell. For Capital Gains Tax, many count as chattels.
For example: Someone buys cases of fine wine, pays for storage for ten years, then finds fewer buyers than expected when they sell.
- See also: Chattels
- Collective defined contribution (CDC)UK
- A workplace pension that pools members' money to pay each a target income.
- In plain English:A type of workplace pension where everyone's money is put together and invested, aiming to pay each member a steady income for life.
MoreLess about Collective defined contribution (CDC)
A workplace pension where members' money is pooled and invested together to pay each of them a target income for life.
The income isn't guaranteed and can rise or fall with the fund. Royal Mail was the first UK employer to offer one.
For example: A postal worker's pension aims to pay a set yearly income for life, but it could be cut if the fund does badly.
- College savings plan (US 529)
- A US account for saving towards a child's education.
- In plain English:In America, a special account for saving for a child's education, where the growth isn't taxed if it's spent on schooling.
MoreLess about College savings plan (US 529)
A US account for saving towards a child's education, where the growth is tax-free if it's spent on school or university costs.
It's often called a 529 plan, after the part of the tax law behind it. A Junior ISA is the nearest UK thing.
For example: American parents save in a 529 plan, and the growth is tax-free when they spend it on their daughter's college fees.
- See also: Junior ISA
- Commodities
- Raw materials such as gold, oil and wheat.
- In plain English:Raw materials like gold, oil, copper or wheat. Their prices can swing a lot with supply and demand.
MoreLess about Commodities
Raw materials like gold, oil and wheat. Their prices swing with supply and demand.
Most people hold them through funds that track their prices, rather than owning the goods themselves.
For example: Someone buys a gold fund instead of gold bars, so they don't have to store or insure anything.
- Article inside Foliopeak: Commodities
- Common-law marriage
- A myth: living together does not give you the rights of a married couple.
- In plain English:Many people think living together for years gives you the same rights as being married. It doesn't, so unmarried couples need wills and agreements.
MoreLess about Common-law marriage
A myth in England and Wales: couples who live together without marrying or forming a civil partnership have few of a married couple's rights.
They have no automatic right to a share of the home or to inherit without a will. Scotland gives them some limited rights.
For example: A woman lives with her partner for 20 years in a house in his name. When they split, she has no automatic right to a share.
- CommonholdApplies in England, Wales
- A way to own a flat outright, with the owners running the building together.
- In plain English:A way of owning a flat forever, with no landlord. All the flat owners together own and run the building.
MoreLess about Commonhold
A way to own a flat outright, with the building run by all the flat owners together, instead of leasehold.
It exists in England and Wales but is rare. The government plans to make it the usual way to own new flats.
For example: In a commonhold block, the flat owners together decide on repairs and costs, with no landlord.
- Companies HouseUK
- The government's public register of companies.
- In plain English:The government office that keeps a public list of every UK company, its directors and its accounts. Anyone can search it for free.
MoreLess about Companies House
The UK government's register of companies.
A limited company files its accounts and a yearly confirmation statement there, and most of what it files is free for anyone to look up.
For example: Before working with a new supplier, a business owner checks its accounts and directors on Companies House.
- Article inside Foliopeak: What a New Limited Company Actually Has to Do
- Company car taxUK
- Income tax on a company car you can use privately.
- In plain English:If your employer gives you a car you can use for personal trips, you pay income tax on a value based on its price and how much it pollutes.
MoreLess about Company car tax
Income tax on a company car you can use privately, worked out from its list price and a percentage set by its CO2 emissions.
Electric cars have the lowest percentage, which is why they're popular as company cars.
For example: Someone picking a company car chooses an electric one, so their yearly tax is far lower than for a petrol car.
- Company Share Option Plan (CSOP)UK
- An employee share option scheme with tax advantages.
- In plain English:A scheme where your employer gives you the right to buy its shares later at today's price. If you keep to the rules, you pay less tax on the gain.
MoreLess about Company Share Option Plan (CSOP)
There's no income tax or National Insurance on using the options, usually once they've been held for three years, up to a limit on their value.
For example: An employee is given options to buy shares at £2. Three years later the shares are worth £5, and she buys them with no income tax to pay.
- Company Tax Return (CT600)UK
- The yearly form a company sends HMRC to work out its tax.
- In plain English:Each year a limited company fills in a form for HMRC showing its profit, so its Corporation Tax can be worked out.
MoreLess about Company Tax Return (CT600)
The yearly return a limited company sends HMRC to work out its Corporation Tax.
It's due 12 months after the end of the accounting period, which is later than the tax itself usually has to be paid.
For example: A company with a year ending in March pays its tax by the following January, and files its return by the next March.
- Completion
- The day a home purchase finishes and you get the keys.
- In plain English:The last step of buying a home. The money moves to the seller, the home becomes yours and you get the keys.
MoreLess about Completion
The day the money is paid, ownership passes and the buyer gets the keys, usually days or weeks after exchange.
Stamp Duty Land Tax is due within 14 days of it.
For example: On completion day, the buyers wait for the call from their solicitor, then collect the keys from the estate agent.
- Article inside Foliopeak: Buying a Home: From Offer to Keys
- Compound interest
- Earning interest on your interest, so savings grow faster over time.
- In plain English:You earn interest, then next year you earn interest on that interest too. Over many years, this makes savings grow faster and faster.
MoreLess about Compound interest
You earn interest on interest that's already been added.
Over long periods it can grow bigger than what you paid in, which is why starting early matters more than the amount.
For example: £1,000 at 5% a year becomes £1,050 after one year, then £1,102.50 after two, because the second year's interest is paid on £1,050.
- Article inside Foliopeak: Compound Interest, IntuitivelyCalculator: Compound Interest
- Concentration risk
- Having too much money riding on one company, industry or country.
- In plain English:If most of your money is in one company, one industry or one country, a single piece of bad news can hit you hard.
MoreLess about Concentration risk
Having too much in one company, industry or country, so one bad event hurts the whole portfolio.
Global index funds now hold a large share in a handful of big US technology companies.
For example: An employee holds most of their savings in their own company's shares. When the company struggles, they lose their savings and could lose their job.
- Confirmation bias
- Believing news that backs up what you already think, and brushing aside the rest.
- In plain English:We tend to notice news that agrees with what we already believe and ignore news that doesn't. It can lead to bad money choices.
MoreLess about Confirmation bias
It's one of the most common thinking traps behind poor money decisions, because it feels like doing research. Search results, social feeds and forums tend to show you more of what you already click on, which makes it stronger.
A simple check is to look for the best case against an investment before you buy, and to write down what would make you change your mind.
For example: Someone who owns a lot of one company's shares reads every upbeat article about it and skips the reports of falling sales, until the share price drops.
- Confirmation of PayeeUK
- A check that the name on an account matches before you send money.
- In plain English:When you send money to someone new, your bank checks the name you typed matches the name on their account, to help stop scams and mistakes.
MoreLess about Confirmation of Payee
It was brought in to cut fraud and payments sent to the wrong person. The result comes back as a match, a close match with the real name shown, or no match.
A no match or close match result is a reason to stop and check with the person you're paying, using details you already trust. If you go ahead anyway, getting the money back can be harder.
For example: A builder emails new bank details, and the app says the name doesn't match. A phone call to the builder's usual number shows the email was from a scammer.
- Article inside Foliopeak: Spotting an Investment Scam
- Confirmation statementUK
- A yearly check that a company's details at Companies House are right.
- In plain English:Once a year, a company confirms to Companies House that its details, like directors and owners, are still right.
MoreLess about Confirmation statement
It's due at least once every 12 months, within 14 days of the date it's set for. There's a small fee each time it's filed.
Not filing it can lead Companies House to strike the company off the register, and the directors can be fined.
For example: A one-person company with no changes in the year still files its confirmation statement online and pays the fee.
- Construction Industry Scheme (CIS)UK
- Rules where building contractors take tax off what they pay subcontractors.
- In plain English:In building work, the main contractor takes some tax off what it pays subcontractors and sends it to HMRC for them.
MoreLess about Construction Industry Scheme (CIS)
Subcontractors who aren't registered with HMRC have more taken off than those who are. Some subcontractors can apply to be paid in full with nothing taken off.
Contractors must check each subcontractor with HMRC and file a monthly return. Subcontractors get a statement of what was taken, which they use on their tax return or company accounts.
For example: A registered plasterer bills a contractor for labour. The contractor pays most of it and sends the rest to HMRC on the plasterer's behalf.
- Consumer DutyUK
- An FCA rule that firms must deliver good outcomes, fair value and clear information.
- In plain English:A rule from the City watchdog, the FCA, that banks and money firms must treat customers fairly, charge fair prices and explain things clearly.
MoreLess about Consumer Duty
It has applied since July 2023.
It covers banks, insurers, lenders, investment platforms and advisers, and applies to everything they sell to everyday customers. Firms have to check and show the FCA that customers are actually getting good results.
If you feel a firm hasn't treated you fairly, you can complain to it first, then go to the Financial Ombudsman Service.
For example: A savings provider writes to customers on an old account paying very little interest, pointing them to a better account it offers.
- See also: FCA (Financial Conduct Authority)
- Contactless payment
- Paying by tapping your card, phone or watch.
- In plain English:Paying by tapping your card, phone or watch on a card reader, with no PIN for smaller amounts.
MoreLess about Contactless payment
Card payments have a limit on how much you can pay by tapping. Phone and watch payments usually have no fixed limit, because you unlock them with a face, fingerprint or code.
If a card is lost or stolen, report it straight away. Payments you didn't make are normally refunded, as long as you weren't careless with it.
For example: Someone taps their card for a £12 lunch, and every few weeks the reader asks for their PIN to check it's really them.
- Contango and backwardation
- Whether futures cost more or less than today's price, which affects commodity fund returns.
- In plain English:When future prices are higher than today's price, it's contango. When they're lower, it's backwardation. It can eat into commodity fund returns.
MoreLess about Contango and backwardation
Futures contracts end on set dates, so a fund that wants to keep holding a commodity like oil has to sell the one ending soon and buy a later one. That swap is called rolling.
In contango each roll buys at a higher price, which slowly eats into returns. In backwardation the roll does the opposite and can add a little.
For example: Oil stays at the same price all year, but an oil fund that rolls futures in contango ends the year down a few percent.
- See also: Futures
- Contract note
- The record you get after buying or selling an investment.
- In plain English:Each time you buy or sell, your platform sends a note saying what you traded, at what price and what it cost. It's your proof of the deal.
MoreLess about Contract note
Most platforms now send it by email or keep it in your account, rather than by post.
If you sell investments outside an ISA or pension, the price and charges on it help show your gain or loss for Capital Gains Tax, so keep it.
For example: Someone buys 50 shares at £4 each. The contract note shows £200 for the shares, a £5 dealing charge and the time the trade went through.
- Article inside Foliopeak: How Buying and Selling Shares Works
- Contracting outUK
- An old arrangement where some people paid less National Insurance for less State Pension.
- In plain English:Years ago, some people paid less National Insurance and put the money into a work pension instead. They may now get less State Pension.
MoreLess about Contracting out
The idea was that your workplace pension would give you at least as much as the extra State Pension you gave up. Many public sector and final salary pensions worked this way.
Your State Pension forecast already takes it into account. More qualifying years added since 2016 can make up some or all of the gap.
For example: A nurse who was contracted out for years sees a starting State Pension below the full amount on their forecast, then sees it rise as they work more years.
- Article inside Foliopeak: The State Pension, and Your National Insurance Record
- Convertible bond
- A company bond that can be swapped for the company's shares.
- In plain English:A loan to a company that pays interest, but you can choose to swap it for shares in the company later.
MoreLess about Convertible bond
If the company does well and its shares rise, the holder can swap and share in the growth. If not, they keep the bond and get their money back at the end, as long as the company can pay.
They are often issued by fast-growing companies that want to borrow cheaply. Their price moves partly like a bond and partly like the shares.
For example: A bond can be swapped for 20 shares. If the shares rise from £40 to £70, the 20 shares are worth £1,400, more than the bond's £1,000 face value.
- Article inside Foliopeak: Bonds
- Conveyancing
- The legal work of moving ownership of a home from seller to buyer.
- In plain English:The legal paperwork when you buy or sell a home, done by a solicitor or conveyancer, so the home passes properly to the new owner.
MoreLess about Conveyancing
It usually starts once an offer is accepted and ends when you complete and get the keys. It often takes two to four months.
Fees are usually a fixed amount plus costs such as searches and the Land Registry fee. On a purchase, the conveyancer also sorts out paying any Stamp Duty.
For example: A first-time buyer's conveyancer finds a planned road near the house in the searches, so the buyer can rethink before signing.
- Article inside Foliopeak: Buying a Home: From Offer to Keys
- Cooling-off period
- A short time after signing up when you can cancel without a reason.
- In plain English:A short time after you sign up for something, often fourteen days, when you can change your mind and cancel without saying why.
MoreLess about Cooling-off period
It's usually 14 days for credit, most insurance and most things bought online or by phone, and often 30 days for a pension or life insurance.
The time usually starts from when you sign up or get the terms, whichever is later. You may still pay for anything you've already used, such as a service started at your request.
It doesn't cover everything. For example, there's usually none for buying shares or funds, or for things made to order.
For example: Someone takes out a loan, then finds a cheaper one a week later. They cancel within 14 days and pay back the money plus interest for the days they had it.
- Copy trading
- Using an app to copy someone else's trades automatically.
- In plain English:An app copies the trades of another investor into your own account automatically. Their past wins don't mean they'll keep winning.
MoreLess about Copy trading
Results shown are often from a short, lucky spell, and the people being copied may be paid more when others copy them. They may also take risks you wouldn't choose.
Many copy-trading apps use CFDs and leverage, which can make losses grow fast. Check that the firm is on the FCA register.
For example: Someone copies a trader with a big gain last year. Within two months the trader takes a large leveraged bet and both lose a third of their money.
- Core inflation
- Inflation with the prices that swing most, like energy and food, left out.
- In plain English:Inflation measured without things whose prices jump around a lot, like food and energy, to show the underlying trend in prices.
MoreLess about Core inflation
Food and energy prices can jump because of weather, wars or supply problems that interest rates can't do much about. Taking them out gives a steadier picture.
Your own costs still include food and energy, so the main headline rate is usually closer to what you feel at the shops.
For example: Energy prices fall sharply, so headline inflation drops, but core inflation stays high because rents and services keep rising.
- See also: Inflation
- Corporate bond
- A loan to a company that pays you interest.
- In plain English:You lend money to a company. It pays you interest and gives your money back on a set date, unless it runs into trouble.
MoreLess about Corporate bond
Bonds from big, steady companies are called investment grade. Bonds from riskier companies pay more and are called high yield.
If the company goes bust, bondholders are paid before shareholders, but they may still get back less than they lent.
For example: A gilt pays 4% a year, while a ten-year bond from a large supermarket chain pays 5.5% because lending to the company is a bit riskier.
- Article inside Foliopeak: Bonds
- Corporation TaxUK
- The tax a limited company pays on its profits.
- In plain English:Limited companies pay this tax on their profits. It's separate from the tax directors pay on their own pay and dividends.
MoreLess about Corporation Tax
The rate is 19% on profits up to £50,000 and 25% above £250,000, with a rate in between that rises gradually from one to the other (marginal relief). For most companies it is due 9 months and 1 day after the end of its accounting period.
The rate is set in each year's Budget, and a company works out what it owes on its CT600 return. The return is due 12 months after the end of the accounting period, later than the payment.
Large companies pay in four instalments during and after the year instead. Losses can be carried forward to cut tax in later years.
For example: A company making £40,000 profit pays 19%, which is £7,600.
Figures checked 11 November 2026. Source: gov.uk (opens in a new tab)
- Article inside Foliopeak: What a New Limited Company Actually Has to Do
- Correlation
- How closely two investments move together.
- In plain English:If two investments tend to rise and fall at the same time, they are closely linked. Mixing ones that aren't helps smooth out the bumps.
MoreLess about Correlation
It's measured from -1 to +1. A score of +1 means two things always move the same way, 0 means no link, and -1 means they always move in opposite ways.
Correlations can change, and in a crisis many investments that usually move separately can fall together.
For example: Shares and gilts often move in different directions, but in 2022 both fell at the same time as interest rates rose.
- Article inside Foliopeak: Diversification and Rebalancing, Briefly
- Cost basis
- The US name for what you paid for an investment, used to work out the gain.
- In plain English:What you paid for an investment, used to work out how much profit you made when you sell. The US name for book cost.
MoreLess about Cost basis
It includes what you paid plus dealing costs and Stamp Duty. Selling costs come off the sale price.
In the UK, shares in the same company are put into a pool, called a Section 104 holding, and the average cost is used. Special rules apply if you sell and buy back within 30 days.
For example: Someone buys 100 shares for £500 and later 100 more for £700. Their pool is 200 shares costing £1,200, or £6 each on average.
- See also: Book cost
- Cost of living
- How much it costs to pay for everyday things such as food, energy and rent.
- In plain English:What you have to pay for everyday things, like food, rent and energy. When prices rise faster than pay, life gets harder.
MoreLess about Cost of living
It's often tracked by the CPI inflation figure, but your own costs depend on what you spend most on.
In a crisis, people on lower incomes feel it most, because more of their money goes on food, energy and rent. Governments may step in with help such as energy payments.
For example: Between 2021 and 2023 energy bills and food prices rose much faster than pay, so many households had less to spend after the basics.
- Article inside Foliopeak: Making a Budget, Alone or Together
- Council TaxApplies in England, Scotland, Wales
- A yearly charge on homes that pays for local council services.
- In plain English:A yearly bill for most homes that pays for local services like bins, roads and schools. It's usually paid monthly.
MoreLess about Council Tax
Councils use it to pay for local services such as bin collection, schools, social care and the police. Each council sets its own rates, so the same band can cost more in one area than another.
Some people don't pay, such as full-time students, and some homes are exempt. Most people pay over 10 monthly instalments, and you can ask for 12.
For example: Someone living alone in a Band C home gets the single person discount off their Council Tax bill.
- Council Tax bandApplies in England, Scotland, Wales
- The band that sets your Council Tax, based on your home's value long ago.
- In plain English:Each home is put in a band based on what it would have been worth decades ago. Your band sets how much Council Tax you pay.
MoreLess about Council Tax band
Homes are valued as at 1 April 1991 in England and Scotland, and 1 April 2003 in Wales.
In England there are eight bands, A to H. Wales has nine, A to I, and Scotland has eight. A home is valued at what it would have sold for on that date, not what it's worth today.
You can check your band on the government's website and compare it with similar homes nearby. A challenge can also put your band up, so check carefully first.
For example: Someone finds identical houses on their street are in band B but theirs is in band C. They challenge it and are moved down, with money back.
- Council Tax ReductionApplies in England, Scotland, Wales
- Help paying Council Tax if you are on a low income.
- In plain English:If you're on a low income or certain benefits, your council can cut your Council Tax bill. You have to apply.
MoreLess about Council Tax Reduction
Each council runs its own scheme, so the rules and amounts vary. It can cut a bill by a little or all the way to nothing.
It's separate from discounts such as the single person discount, and you can get both. Pensioners usually have a national scheme that's more generous.
For example: Someone on Universal Credit applies to their council and their Council Tax bill is cut by three quarters.
- Counterparty risk
- The chance that the other side of a deal fails to pay what it owes.
- In plain English:The risk that the person or company on the other side of a deal doesn't pay what they owe you.
MoreLess about Counterparty risk
It matters most with things like derivatives, CFDs and structured products, where you rely on a firm to pay out. It also applies to savings, where the bank is the other side.
Spreading money across firms and using ones covered by the FSCS can limit how much is at risk if one fails.
For example: When Lehman Brothers collapsed in 2008, people holding products it had promised to pay lost money, even though the markets the products tracked had recovered.
- Article inside Foliopeak: Systemic Risk
- Coupon
- The interest a bond pays.
- In plain English:The interest a bond pays you each year, set when the bond is first sold.
MoreLess about Coupon
The name comes from the days when paper bonds had small coupons attached that holders cut off to claim each payment.
Most bonds pay their coupon once or twice a year. Because it's fixed, a bond's price moves up or down to give new buyers a return in line with today's interest rates.
For example: A £1,000 bond with a 4% coupon pays £40 a year, often as two payments of £20.
- Article inside Foliopeak: Bonds
- CPI and RPI
- Two ways of measuring how fast prices are rising.
- In plain English:Both measure how fast prices are rising. CPI is the main official one. RPI is older and usually higher, but is still used for some things.
MoreLess about CPI and RPI
RPI usually comes out higher than CPI because of the way it's worked out, and it includes mortgage interest and Council Tax. It's no longer an official national statistic.
RPI is due to be brought in line with CPIH (CPI plus housing costs) from 2030. Most benefits and the State Pension rise with CPI or earnings.
For example: In the same year CPI might show prices up 3%, while RPI shows them up about 4%.
- Credit builder card
- A credit card designed to help you build a better credit record.
- In plain English:A credit card with a low limit for people with little or poor credit history. Paying it off in full each month can improve your record.
MoreLess about Credit builder card
Using it for a small, regular bill and setting up a Direct Debit to clear it in full each month shows lenders you can handle credit.
The high interest only matters if you leave a balance. Late or missed payments can make your credit file worse, not better.
For example: Someone new to the UK puts their £15 phone bill on a credit builder card and pays it off in full for a year, then gets a better card.
- Credit card
- A card for borrowing up to a limit, with interest if you don't clear it in full.
- In plain English:A card that lets you borrow up to a limit. If you pay the whole bill each month you usually pay no interest. If not, interest can be high.
MoreLess about Credit card
Many purchases are also covered by Section 75, so the card provider shares responsibility if something goes wrong.
Paying only the minimum each month can mean years of interest. Cash withdrawals are usually charged interest straight away, plus a fee.
For example: Someone spends £600 on a card with a 25% interest rate and pays the full £600 by the due date, so they pay no interest.
- Article inside Foliopeak: Credit Cards and Borrowing: What It Really Costs
- Credit crunch
- When banks suddenly cut back on lending, so borrowing gets harder.
- In plain English:When banks suddenly become much less willing to lend, so people and businesses struggle to borrow. It happened badly in two thousand eight.
MoreLess about Credit crunch
The best known one was in 2007 and 2008.
It started with banks in the US losing money on mortgages to people who couldn't afford them. Banks stopped trusting each other and stopped lending.
In the UK it led to the run on Northern Rock in 2007, and some banks had to be rescued by the government. Many people found mortgages much harder to get for years.
For example: In 2008 lenders pulled many mortgage deals, and some first-time buyers needed a 25% deposit to get a loan.
- Article inside Foliopeak: Systemic Risk
- Credit default swap (CDS)
- A contract that works like insurance against a borrower failing to pay.
- In plain English:A deal where one side pays a regular fee, and the other pays out if a company or country fails to pay its debts. It works a bit like insurance.
MoreLess about Credit default swap (CDS)
The buyer pays a regular fee, and gets paid if the borrower fails to pay. You don't have to own the borrower's debt to buy one, so they can be used to bet on failure.
They played a big part in the 2008 crisis, when the insurer AIG had sold far more than it could pay and needed a rescue.
For example: When investors worried about Greece in 2011 and 2012, the price of insuring its debt with a credit default swap shot up.
- See also: Derivatives
- Credit file (credit report)
- The record of your borrowing and repayments that lenders check.
- In plain English:A record of how you've borrowed and paid back, kept by credit reference agencies. Lenders check it before lending to you.
MoreLess about Credit file (credit report)
It usually shows your loans, cards, mortgages and some bills for the last six years, whether you paid on time, and any defaults or court judgments.
It doesn't hold your income, savings or a score. Checking your own file doesn't affect it.
For example: Someone checks their credit file before a mortgage and finds an old phone contract wrongly shown as unpaid. They ask for it to be fixed.
- Article inside Foliopeak: Your Report Matters More Than Your Score
- Credit limit
- The most a lender lets you borrow on a card or overdraft.
- In plain English:The most you're allowed to borrow on a credit card or overdraft. Going over it can bring fees.
MoreLess about Credit limit
Lenders set it from your income, credit file and how you've used credit before. They can raise or lower it, but must tell you first, and you can ask them not to raise it.
Using only a small part of your limit tends to look better to lenders than being near it.
For example: Someone with a £2,000 limit spends £2,050 and is charged a fee for going over.
- Credit rating
- A grade showing how likely a government or company is to repay its debts.
- In plain English:A grade, like AAA, that tells investors how likely a country or company is to pay back what it borrows.
MoreLess about Credit rating
Bonds rated BBB- or above (Baa3 at Moody's) are investment grade, and lower ones are high yield, or junk.
A higher grade usually means the borrower can borrow more cheaply. A cut in grade can push up the interest they have to pay.
Ratings can be slow to change and have got it wrong before, most famously before 2008. They're an opinion, not a promise.
For example: When the UK's grade was cut from AAA in 2013, the government's borrowing costs barely changed.
- Article inside Foliopeak: Bonds
- Credit rating agencies
- Companies like Moody's, S&P and Fitch that grade how likely borrowers are to pay back.
- In plain English:Companies that study governments and businesses and give them a grade for how likely they are to pay back their debts.
MoreLess about Credit rating agencies
They're paid by the borrowers they rate, which critics say can bias them. In the UK and EU they must be registered and supervised.
Fund managers and pension schemes often have rules limiting how much they can hold below a certain grade, so a cut can force selling.
For example: A company's grade is cut from BBB- to BB+, below investment grade, and some funds have to sell its bonds.
- See also: Credit rating
- Credit reference agency
- A company that keeps credit records on people.
- In plain English:A company that keeps records of how people borrow and repay. In the UK the main ones are Experian, Equifax and TransUnion.
MoreLess about Credit reference agency
Lenders send them details of how you repay, and they sell checks to lenders, landlords and some employers. You can see your file with each one free, often through an app.
A mistake on one agency's file may not be on the others, so it's worth checking all three before a big application like a mortgage.
For example: Someone finds a wrong address linked to them on Equifax but not on Experian or TransUnion, and asks Equifax to remove it.
- Article inside Foliopeak: You Don't Have One Credit Score
- Credit repair companies
- Firms that charge to fix your credit file, which you can do yourself for free.
- In plain English:Firms that charge you to improve your credit file. You can check and fix your file yourself for free.
MoreLess about Credit repair companies
Some promise to remove correct records such as missed payments or defaults, which they can't do. Some are scams.
What actually helps is paying on time, using less of your credit limits, getting on the electoral roll and letting old problems fade after six years.
For example: A firm offers to "wipe" a default for £300. The default is correct, so it stays on the file for six years whatever anyone pays.
- Article inside Foliopeak: Your Report Matters More Than Your Score
- Credit risk
- The chance a borrower doesn't pay back what it owes.
- In plain English:The chance that someone you've lent money to, like a company whose bond you hold, doesn't pay you back.
MoreLess about Credit risk
Credit ratings are one way to judge it, and the extra interest a borrower pays over a government is called the credit spread.
Spreading money across many borrowers, such as through a bond fund, reduces the damage if one fails.
For example: A small, struggling company has to pay 9% a year on its bonds while a large, steady one pays 5%.
- Credit score
- A number that sums up your credit record.
- In plain English:A number that shows how good your credit record looks. Each agency works it out differently, and lenders use their own checks too.
MoreLess about Credit score
Different apps can show very different numbers for the same person because they use different scales. The score itself isn't sent to lenders.
What matters is what's behind it: paying on time, not using too much credit, a settled address and few recent applications.
For example: One app gives someone 850 out of 999, another 420 out of 700, but both are saying their credit is "good".
- Article inside Foliopeak: You Don't Have One Credit Score
- Credit union
- A not-for-profit savings and loans group owned by its members.
- In plain English:A not-for-profit group owned by its members that offers savings and fairer loans, often for people in the same area or job.
MoreLess about Credit union
Profits go back to members, often as a yearly dividend on savings or cheaper loans. Loans tend to be fairer than payday loans, and interest is capped by law.
Savings are covered by the FSCS like a bank. Some ask you to save for a while before you can borrow.
For example: Someone borrows £500 from their local credit union at a fraction of what a payday lender would charge.
- Credit utilisation
- How much of your available credit you are using.
- In plain English:How much of your credit limits you're using. Using a small part of them usually looks better to lenders than being near the limit.
MoreLess about Credit utilisation
It's usually worked out across all your cards and overdrafts together, and also card by card.
Paying down balances or keeping old cards open with a zero balance can lower it. It's only one part of what lenders look at.
For example: Owe £1,500 on a card with a £5,000 limit and your utilisation is 30%.
- Article inside Foliopeak: Your Report Matters More Than Your Score
- Critical illness cover
- Insurance that pays a lump sum if you are diagnosed with a serious illness.
- In plain English:Insurance that pays you a lump sum if you're diagnosed with a serious illness listed in the policy, like some cancers or a heart attack.
MoreLess about Critical illness cover
It's often taken out alongside a mortgage or life insurance. The money can be spent on anything, such as clearing debts or paying bills during treatment.
The illness has to meet the policy's exact definition and severity, so read the list closely. It's different from income protection, which pays a monthly amount while you can't work.
For example: Someone is diagnosed with a covered cancer and their policy pays £100,000, which they use to clear the mortgage while off work.
- Article inside Foliopeak: Life Insurance and Income Protection: The Gap Most Families Have
- Crypto ATMUK
- A machine that swaps cash for crypto, which is illegal to run in the UK.
- In plain English:A machine where you put in cash and get crypto back. In the UK, no one is allowed to run one, so any you see are breaking the law.
MoreLess about Crypto ATM
The FCA has found and shut down many machines in shops and on high streets. Using one isn't a crime, but the person running it is acting illegally and there's no protection.
Scammers often tell people to put cash into these machines to "keep their money safe" or pay a fake bill. A real bank or HMRC will never ask that.
For example: Someone gets a call from a fake "bank safety team" telling them to put £3,000 into a crypto ATM. It's a scam and the money can't be got back.
- Article inside Foliopeak: What Actually Protects Your MoneyGame: Scam or Legit
- Crypto ETN (exchange traded note)
- A product on a stock exchange that follows the price of a cryptocurrency.
- In plain English:A product you can buy on a stock exchange that tracks the price of a crypto coin, so you don't need to hold the coin yourself.
MoreLess about Crypto ETN (exchange traded note)
UK investors have been able to buy them through a broker since 8 October 2025, if they trade on a UK exchange the FCA recognises. There's no FSCS cover.
ETN stands for exchange traded note. If the firm that issued it fails, you could lose money even if the coin's price is fine.
They can be held in an ISA or SIPP if they meet HMRC's rules, which you can't do with coins themselves. They still swing as much as the coin.
For example: Someone buys a bitcoin ETN in their stocks and shares ISA, so any gain is free of Capital Gains Tax.
- Article inside Foliopeak: Cryptocurrency
- Crypto exchange
- A firm where people buy, sell and hold cryptocurrency.
- In plain English:A company where you can buy, sell and store crypto. If it goes bust or is hacked, your coins may not be protected.
MoreLess about Crypto exchange
Registration means it checks who you are and watches for money laundering. It doesn't mean the FCA has checked that it's safe to use, or that your coins are protected.
If an exchange fails or is hacked, you could lose everything held there. Some people move coins to their own wallet for this reason.
For example: When the exchange FTX collapsed in 2022, millions of customers around the world lost access to the coins they held on it.
- Crypto lending
- Lending crypto out for interest, or borrowing against crypto you own.
- In plain English:You lend your crypto to a firm or app and it pays you interest, or you borrow money using your crypto as security. If the firm fails, you can lose it all.
MoreLess about Crypto lending
When lenders such as Celsius collapsed in 2022, customers couldn't get their coins back. Lending coins can also count as selling them for tax.
The interest offered is often high because the risk is high. The platform may lend your coins on to others, and if they don't pay back, you lose.
HMRC may also treat interest earned as income. Records of every loan and return help when doing your tax return.
For example: Someone lends 1 bitcoin to a platform paying 8% a year. The platform goes bust and they get back only a small part of it, years later.
- Article inside Foliopeak: The Crypto Rulebook: What Changes in October 2027
- Crypto mining
- Using computers to check crypto transactions, in return for new coins.
- In plain English:Computers race to solve puzzles that check crypto payments are real. The winner gets new coins as a reward, but it uses a lot of electricity.
MoreLess about Crypto mining
Miners compete to solve hard puzzles, and the first to solve one adds the next block of transactions and gets the reward.
If you later sell the mined coins, any rise in value since you got them can also mean Capital Gains Tax. Done as a business, it's taxed as trading income.
For example: Someone mines coins worth £500 when they get them. That £500 counts as income, and if they later sell for £800, the £300 rise is a capital gain.
- Article inside Foliopeak: CryptocurrencyGame: Halving Clock
- Crypto taxUK
- How the UK taxes crypto when you sell, swap, spend or earn it.
- In plain English:Crypto isn't tax-free. Selling it, swapping one coin for another or spending it can all mean Capital Gains Tax, and earning it can mean Income Tax.
MoreLess about Crypto tax
Each coin type has its own pool, and the same 30-day rules as shares apply. Swapping one coin for another counts as selling the first.
Keeping records of every buy, sell and swap, with the value in pounds at the time, makes your tax return much easier.
For example: Someone swaps bitcoin worth £5,000, which cost £2,000, for ether. That's a £3,000 gain for Capital Gains Tax, even though no pounds changed hands.
- Article inside Foliopeak: Cryptocurrency
- Crypto wallet
- Where the keys that control your cryptocurrency are kept.
- In plain English:Your crypto isn't stored in the wallet itself, but the secret keys that let you use it are. Lose the keys and you lose the coins.
MoreLess about Crypto wallet
A wallet you look after yourself is protected by a recovery phrase of 12 or 24 words. Anyone who has that phrase can take the coins, so never share it.
A hardware wallet is a small device that keeps keys offline. Leaving coins on an exchange is easier, but you rely on that firm being safe.
For example: Someone writes their 24-word recovery phrase on paper and keeps it locked away. When their phone breaks, they use it to get their coins back.
- Article inside Foliopeak: Cryptocurrency
- Cryptoasset Reporting Framework (CARF)
- Rules that make crypto firms report their customers' trades to tax authorities.
- In plain English:New rules that make crypto firms tell tax authorities what their customers buy and sell, so it's harder to hide crypto gains.
MoreLess about Cryptoasset Reporting Framework (CARF)
It covers trades from 1 January 2026. It changes no tax.
CARF stands for Crypto-Asset Reporting Framework. The first reports to HMRC are due in 2027, covering 2026.
Platforms ask for your name, address and tax number, and can close accounts that don't provide them. HMRC can match the reports against tax returns.
For example: A UK customer sells crypto on an exchange in 2026. The exchange reports the sale to HMRC, which checks it against the customer's tax return.
- Cryptocurrency
- Digital money such as Bitcoin that no central bank issues.
- In plain English:Digital money that isn't made by a government or bank. Its price can swing wildly, and it has little protection if things go wrong.
MoreLess about Cryptocurrency
Bitcoin was the first, in 2009. Thousands of others now exist, and prices can rise or fall by large amounts in days.
It isn't legal tender in the UK. The FCA warns you should be ready to lose all the money you put in, and scams using crypto are common.
For example: Bitcoin's price fell by more than three quarters between late 2021 and late 2022, then rose again.
- Article inside Foliopeak: Cryptocurrency
- Crystallisation
- Starting to use pension savings, by taking cash or setting up an income.
- In plain English:When you start taking money from a pension, like cash or an income, that part of your pot is said to be crystallised.
MoreLess about Crystallisation
Usually up to a quarter can be taken tax-free, and the rest is taxed as income when you take it out.
Taking taxable money from a pension, even a small amount, can trigger the Money Purchase Annual Allowance, which cuts how much you can pay in afterwards.
For example: Someone moves £40,000 of their pension into drawdown, takes £10,000 tax-free and leaves £30,000 invested to draw on later.
- Article inside Foliopeak: Taking Your Pension - the Spending Side
- Currency hedging
- A fund cancelling out exchange rate moves, which is what "GBP hedged" means.
- In plain English:If a fund invests abroad, changes in exchange rates can change its value in pounds. A hedged fund uses deals to cancel most of that out.
MoreLess about Currency hedging
Without it, a fall in the pound makes overseas investments worth more in pounds, and a rise makes them worth less. Hedging removes most of that swing, good or bad.
For shares, many people don't hedge, because currency swings tend to even out over long periods.
For example: A global bond fund in "GBP hedged" form is barely affected when the dollar falls, while the unhedged version drops in value.
- See also: Currency risk
- Currency risk
- The chance that exchange rates change what an overseas investment is worth to you.
- In plain English:If you invest abroad, your returns in pounds can rise or fall just because the pound gets stronger or weaker.
MoreLess about Currency risk
It can work for you as well as against you. When the pound falls, overseas investments are worth more in pounds.
Holding a mix of UK and overseas investments spreads this risk. Some funds hedge it away.
For example: An American share stays at $100, but the pound rises from $1.25 to $1.40, so it's worth about £71 instead of £80.
- Article inside Foliopeak: Currency Risk on Overseas Holdings
- Current account
- Your everyday bank account for pay coming in and bills going out.
- In plain English:Your everyday bank account, where your pay goes in and your bills and card spending come out.
MoreLess about Current account
Money in a UK current account is covered by the FSCS up to its limit if the bank fails. Many come with an arranged overdraft, which can be expensive.
Banks sometimes offer switching bonuses or interest on a small balance. Keeping only bills and spending money here and the rest in savings often earns more.
For example: Someone's salary goes into their current account on the 25th, and their rent, phone and energy Direct Debits go out a few days later.
- Current Account Switch ServiceUK
- A free service that moves your current account to a new bank for you.
- In plain English:A free service that moves your account, Direct Debits and payments to a new bank within seven working days, and promises to fix any mistakes.
MoreLess about Current Account Switch Service
It's guaranteed, so if anything goes wrong with a payment during the switch, the new bank refunds any charges or interest. Your old account is closed.
For 36 months payments sent to your old account are passed on to the new one.
For example: Someone moves to a bank offering a £175 switching bonus. Their salary and seven Direct Debits move automatically within a week.
- Article inside Foliopeak: How Money Moves: Faster Payments, Bacs and CHAPS
- Current ratio
- A test of whether a business has enough short-term money to pay its bills.
- In plain English:A business's short-term money divided by its short-term bills. Above one means it can pay what's due soon.
MoreLess about Current ratio
It's a quick way for lenders and investors to judge whether a business can cover its short-term bills. A ratio above two is often seen as comfortable.
A very high ratio can also mean a business is holding too much cash or stock that could be used better.
For example: A shop has £60,000 in cash, stock and money owed to it, and owes £40,000 within a year. Its current ratio is 1.5.
- See also: Working capital
- Custodian
- The firm that holds your investments safely, separate from the platform's own money.
- In plain English:A company that looks after your investments for you, kept apart from the platform's own money, so they're safe if the platform fails.
MoreLess about Custodian
They're usually big banks or specialist firms. The rules that keep your investments separate are called client asset rules.
If something is missing when a platform fails, the FSCS can cover some of the loss. Getting your investments back can still take months.
For example: When an investment platform went into administration, its customers' funds were held by a custodian and moved to another platform.
- Article inside Foliopeak: What Actually Protects Your Money
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