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Cap

A ceiling on an interest rate. This usually applies to mortgages, where a rate may be ‘capped’ so it cannot move above that level. You can also have a collar: A level the rate cannot move below.

Capital

The money that is invested in a company. Your own money - such as capital gains tax - can also be called capital.

Capital growth

The increase in the value of assets and investments.

Capital gains tax (CGT)

Tax paid on the profits or gains made from the sale of investments and some fixed assets. There is an annual CGT-free allowance.

CAT mark

CAT is an acronym for 'Charges, Access, Terms' and the mark is a government seal of approval on an individual savings account (ISA).

Churning

A term used to describe the excessive trading of a client's account by a broker in order to increase their commissions.

Closed ended fund

This is a fund with a fixed number of shares, such as an investment fund. The opposite is an open ended fund.

Commodities

Goods that have been mined, produced or harvested, like gold or coffee beans. These are bought and sold in dedicated commodities markets.

Company share option scheme

A scheme offered by companies to employees to encourage better performance. Participants are given the right to buy shares in the company in the future, usually at a discount.

Compound interest

This means interest that is earned on the principal amount plus the accumulated interest of prior periods.

Consumer Credit Act

This provides legal protection for you when taking out credit such as a personal loan or credit card: If you buy items or services for more than £100 but less than £30,000 on credit, you are covered if they are not supplied or something goes wrong.

Consumer Prices Index

This is the Government’s favoured measure of inflation.

Continuous authority

Authority given by you to a retailer or other merchant to take regular payments from your credit card. It has to be cancelled with the merchant, not with the bank issuing the card.

Contract note

The confirmation of your share purchase transaction.

Cooling off period

The time you have in which to change your mind about whether you want a financial product. The length of the cooling off period depends on how you bought the product: Some agreements may not have a period in which you can change your mind.

Corporate bond

Bonds issued by a public company. In return for you lending the company money, it pays you an income in the form of a coupon. Corporate bonds are usually safer than investing in shares, but less safe than leaving money on deposit in a savings account. The easiest way to invest is through a corporate bond fund.

Corporation tax

Tax chargeable on the profits of a UK company.

Correction

A reverse movement in the value of shares or securities, usually a sharp downturn in the value.

Coupon

The interest rate on a fixed-interest security.

Credit

The ability to borrow money. If you find it easy to get it, you are creditworthy.

Credit card

A card used to buy goods and services. Spending on a credit card means that purchases over £100 are covered by the Consumer Credit Act. Unless you pay your balance off in full, you will be charged interest.

Credit card cheques

These are cheques provided by credit card providers, which can be used to pay for goods and services. Beware: you may have to pay interest when you use them in the same way as you would when making a cash withdrawal. The interest rate is usually higher than the one charged when paying for goods or services on a credit card.

Credit limit

The maximum amount of money a financial institution will agree to lend to you.
For example, with credit cards, it’s the most a card provider will let you borrow at any one time on a particular card.

Credit history

A record which shows how you have handled credit in the past, including how much credit you have available and whether you’ve kept up repayments. This will be used to give you a credit rating.

Credit rating

Your credit rating, also known as your credit score, measures how reliable you are as a borrower by looking at your credit history.

It is found on your credit report which all lenders access via one of three main credit reference agencies when you apply for credit.

The lender will use the score to decide whether or not to accept your application for a credit card or loan - and what your credit limit and interest rate will be.

You can find out about your credit history by applying for your credit report.

Credit reference agencies

There are three main agencies: CallCredit, Equifax and Experian. They provide details of your credit record and history to companies.

Credit unions

Locally-run savings and loan companies usually with a common bond between customers, such as location or employment. Regulated in the UK by the Financial Services Authority.

Creditor

Someone you owe money to.

Critical illness cover

An insurance policy which will pay out a lump sum if you are diagnosed with or suffer from any of the life-threatening conditions (such as cancer, heart attack or stroke) listed on the policy.

Current account

A bank account which allows you to withdraw money from ATMs, by cheque, via the internet or in-branch. Your pay can be put into it and bills automatically paid out by direct debit every month. If you withdraw more money than you have, you will have an overdraft and may be charged high rates of interest for borrowing the money. A basic bank account does not allow you to go overdrawn.

Cyclical stocks

These are shares which move in line with the economy. Non-cyclical stocks are those which are immune to such pressures.

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