The base rate is the benchmark interest rate set by the Bank of England. A lender's rate will almost always follow the Bank of England base rate- if it goes up or down, the lender's standard variable rate will also go up or down. Fixed rate accounts mean you don't need to worry about earning less interest if the base rate goes down as you've locked in your money at a higher rate, but if the base rate goes up you won't earn the higher rate of interest either. The base rate is an important thing to consider when you're deciding whether to fix your savings or not.
Basic Rate Tax
You can earn a certain amount each year without paying tax, known as your annual personal allowance. In the tax year 2014-15, the annual personal allowance for under 65s is £10,000, for those born between 6th April 1938 and 5th April 1948 it's £10,500, and £10,660 for those born before 6th April 1938. Basic rate tax will be applied at a rate of 20% to any income you earn above your allowance up to £32,010. You will pay tax on your interest earned on any savings account, except for ISAs, which are tax free.
Fixed Rate Bond
A fixed rate bond allows you to earn a higher rate of interest by locking your money away for a set period of time, usually between 1 and 6 years. You usually won't be able to access your money during this time, but you could earn more interest than with an instant access account.
If an account has a fixed term, this is the length of time for which you'll need to lock your money away to get the advertised rate. Some providers will allow you to withdraw some or all of your money before this term ends, but you'll usually be penalised with fees or a loss of interest.
This type of account allows you to deposit or withdraw your money at any time, with no notice or penalties.
This is the amount the financial institution that holds your account will pay you in return for saving with them. To find out how much your savings will earn, you can look at the AER- the Annual Equivalent Rate. Shown as a percentage, this tells you the rate of interest you will earn over the period of 1 year. The interest rate may be fixed, which means it will not change throughout the life of the account, regardless of whether the Bank of England base rate goes up or down. Alternatively, the rate may be variable and fluctuate along with the base rate.
An introductory bonus is a fixed amount of extra interest which will be paid on any money you have saved in a variable interest account for a certain amount of time after you open the account. Once the introductory period is over the rate will revert to the normal variable rate, so you may wish to consider moving your money to make sure you're always getting the best rate.
An ISA is a type of account which allows you to save without paying tax on the interest you earn. There are several different types of ISA- the most common is a cash ISA, in which every adult over the age of 18 can currently save up to £5,940 each year. There are also investment ISAs- commonly known as stocks and shares ISAs- where you can save another £5,940 on top of your cash ISA allowance, or any amount up to the full total of £11,880 if you decide not to use your full cash ISA allowance, and from July 1st this allowance will be increased to £15,000, with no restrictions on the amount you can save in cash. Finally, there are Junior ISAs which can be opened for children under the age of 18.
A one off amount of money an individual wants to pay into an account. Most accounts with a fixed term will require you to pay in a lump sum and will not allow you to make any more deposits, whereas instant access accounts may allow you to make regular payments into the account.
A savings account where the account holder is required to give a notice of withdrawal a specified number of days before their money can be released.
Standard Variable Rate
This is the basic rate at which financial institutions pay interest to their savers. It's usually a certain percentage amount above the Bank of England base rate. Many savings accounts have an introductory bonus rate which allows you to earn more interest on your savings for a fixed length of time before the amount you earn reverts to the standard variable rate.
The amount allowed to be invested in an ISA account which is free of income tax. This is currently £5,940 in a cash ISA or £11,880 in an investment ISA, with the total allowance rising to £15,000 from July 1st, with no restrictions on the amount you can save in cash.