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Jargon buster

jargon buster

The world of finance can be a complex and downright scary place! There are many companies that claim they are simplifying their services and making things easier for customers to understand but small print, acronyms and loads of jargon are still the name of the game when it comes to getting a loan.

Wonga’s instant online loan service was specifically designed to be as simple as possible to use – you won’t find a ton of abbreviated nonsense here! But if you do happen to find yourself in a financial fog somewhere else in your online travels, then this jargon buster will come to the rescue.


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ACH

An ACH, or Automated Clearing House is a financial network that looks after all the electronic cash transactions that whizz around every day. Each country has their own automated clearing house and they tend to operate on week days only. Bankserv is South Africa’s automated clearing house and is well known as one of the most effective and efficient in the world.

Administration Order

This is an order issued by a Magistrate’s Court in terms of which a consumer’s debt, which may not exceed R50 000 is restructured and administrated by a court appointed administrator

AER

AER stands for Annual Equivalent Rate and it represents the interest rate you would get if the gross interest was paid and compounded annually. It is basically designed to compare the annual interest between savings accounts or investments with different compounding terms (daily, monthly, annually). It doesn’t generally incorporate one-time charges, such as a sign up fee

Agreement

An agreement is a decision or arrangement made between at least two groups or individuals. In the case of a personal loan agreement, it’s a document that formalises the terms of the loan between an individual and the lender. Once you sign a loan agreement, you are then held responsible for making the agreed arrangements for repaying the money you’ve borrowed, so you should always consider the cost and the terms carefully before completing any offer of credit.

APR

The Annual Percentage Rate or APR is the annual cost of a loan, including the interest and other charges, and is expressed as an annual rate of change. It is not a widely used term in South Africa but its use is widespread in the UK

Arrangement fee

This is a fee charged by a company in order to cover its administration costs. Banks and other credit lenders usually charge this kind of a fee for arranging large loans and overdrafts. It’s basically another way of making money.

Arrears

You are classified as being ‘in arrears’ if and when scheduled loan or other credit repayments are overdue. People who are in arrears sometimes have trouble gaining further credit as it affects their credit rating. If the debt is secured against a property, for example, it could be repossessed to clear the arrears. So it’s a very serious situation to be in and should be avoided wherever possible. Being in arrears can be very stressful, so don’t bottle it up. Talk to your creditors (the people you owe money to) and seek support from organisations such as debt counsellors or the credit ombud www.creditombud.org.za

Employees are also commonly paid in arrears – payday is at the end of a working week or month.

Assets

An asset is anything you own which is of financial value – from cash to property; electronics to investments. If you remain in arrears (see above) for a long period of time, creditors may have the right to seize some of your assets. This is definitely the case with secured loans, which are guaranteed by being tied to your property.

Assurance

A Life assurance policy is an insurance policy that pays money to the next of kin if the policy holder dies. The idea is that your family receives cash to help with funeral expenses and other costs after you’ve gone.

Bankserv

Bankserv is South Africa’s official automated clearing house. It partners with the financial services industry to facilitate the country’s national payments system – it’s involved with electronic-payment and information-switching services. It was formed in 1993 by an inter-bank task team in order to consolidate the various different service companies operating in the financial services sector.

Balance

This is the amount of money remaining in a bank account net of all the credits and debts at that time. In the case of a loan account, it is the outstanding debt on a loan.

Bank

Banks are institutions where people and businesses can invest or borrow money. Banks also offer services such as exchanging foreign currencies and insurance. In South Africa the ‘Big Four’ banks are Standard Bank, ABSA, First National Bank and Nedbank.

Bank loan

Bank loans can be for personal or business use. Personal bank loans range in amounts of up to R120 000 and you can normally repay the money over a period of up to 5 years. Bank loans usually involve a meeting in the branch with your bank manager and you may not be approved – even if you have been a customer at the bank for a long time.

Banker's draft

This is a cheque drawn on the bank or building society against either a cash deposit or money in your own account. It is a secure way of receiving money from someone where cash is inconvenient or unsecure for the buyer. Banker’s drafts are usually used for large denominations.

Bank Guaranteed Cheque

A bank guaranteed cheque is a form of cheque for which the bank verifies that there are sufficient funds in the account to cover the cheque at the time it is signed.

Bounced cheque

A cheque ‘bounces’ when the bank account has insufficient funds to honour the payment. In this case, the bank will return the cheque unpaid, to the account holder. The intended receiver of the money won’t have been paid and this normally incurs a hefty fee from the bank.

Budget

A personal budget shows your regular income against your regular costs, so you can calculate the remaining balance. You can predict a shortfall of cash, or work out how much you should have left over to either spend or save. It’s a really good idea to create and follow a budget so that you can take control of your finances.

The National Budget is what the country’s Finance Minister manages. It is the same as a personal budget except it contains the country’s income and outgoing finances.

Capital

The word ‘Capital’ is often used to describe a large amount of money used for generating more wealth, such as capital invested to start a new business. It doesn’t include the income or profit you get from an investment, nor the interest you have to pay on any loan or home loan.

Cash advance

A cash advance is money borrowed against a prearranged line of credit, like a credit card or a loan agreement. It could be used to describe a small loan made over a short period of time, rather than traditional loans which are usually taken over a much longer period of time.

Cash flow

Cash flow, or net cash flow, is the balance of cash being received and paid by an individual or business. It is often measured during a defined period of time and can be used to determine problems with liquidity. In other words, a company can fail because of a shortage of incoming cash even while it is profitable. Similarly, an individual can get into arrears, even though their income is more than his expenditure.

Credit Provider

A Credit Provider is the person or organization that extends the credit, or in other words the person or the bank that lends you the money. If you are in arrears your credit provider can take legal action against you, in order to claim the money owed back. If you pay the money back you can avoid a hearing or judgement. If you can’t afford to pay the amount back it is a good idea to seek debt counselling.

Charge card

A charge card looks like a credit card and allows you to spend money in pretty much the same way as a credit card. However, the balance must be paid in full when the statement is received. Most charge card providers will operate penalty charges which are significantly higher than credit card interest rates if you fail to pay on time. The leading charge card companies in South Africa are American Express and Diners Club.

Charges

This is the money paid to financial institutions for the services provided. Penalty charges are also applied if services are misused or terms are broken. Penalty charges can include unsuccessfully debit orders, unauthorised overdrafts, bounced cheques and late payment fees. If you fail to have sufficient funds in your bank account, when we try to make a collection on your chosen repayment date, your bank could charge you a penalty fee.

Chip and PIN

Chip and PIN is a payment system designed to reduce card fraud. A chip and PIN card has a ‘smart’ chip that holds your Personal identification number or PIN. When you pay in a shop with a chip and PIN card, you are asked to enter your PIN into a keyboard instead of signing a receipt. This PIN can also be used at cash machines to withdraw money.

Clearance Certificate

A consumer who has settled all his/her debt in terms of a debt restructuring must receive a ‘clearance certificate’ from the debt counsellor. This allows the consumer to have his/her credit record that is held by the credit bureau, cleared.

Cleared balance/Cleared funds

This is the balance in an account that is able to be withdrawn or used in other financial transactions. It refers to the types of credit – cash, cheques, electronic payments and overdraft funds – that have completed the clearing cycle and are therefore ready to access. The cleared balance is updated during the day as payments go in and out of your account.

Clearing cycle

The clearing cycle is the process that cheques or electronic payments go through when paid into your account. Depending on the type of credit, the clearing cycle takes different lengths of time. For example it can take up to ten days for a cheque to clear.

Consolidation Loan

This is a loan taken by a consumer in order to bring his/her debt together as a single loan with a view to settling it.

Consumer Protection Act

The Consumer Protection Act (No 68, of 2008) came into effect on 1 April 2011 and aims to protect and advance the social and economic welfare of consumers in South Africa. The purpose of the Act is to rid the market of unethical trading, unsafe products, unfair business practices and irresponsible marketing. It applies to almost every company or organisation supplying goods and services in South Africa as well as the transactions it enters into with consumers.

Credit agreement

This is an agreement in terms of which a credit provider sells goods or lends money to a consumer. The consumer is expected to agree to the terms and sign the agreement. The agreement contains information about the product the consumer has applied for and been granted.

Credit card

A credit card is a plastic card that allows you to borrow money, up to your credit limit, to pay for goods and services from most companies. Credit cards traditionally charge higher rates of interest than other forms of unsecured loans from banks, but can offer good value if the balance is repaid on time each month. If you don’t always pay off the amount outstanding (and just make the minimum required payments), the balance can easily spiral out of control and become harder to settle completely. There are a large number of credit cards available and you should always do your research before deciding to apply for one.

Credit Crunch

The term ‘credit crunch’ has been thrown around a lot lately by politicians and financial professionals. It’s used to describe a sudden reduction in the availability of credit, or the sudden increase in the cost of obtaining loans from banks. In this case, the recent credit crunch was caused by a sustained period of careless and inappropriate lending which resulted in losses for lending institutions and investors in debt when the loans turned sour and the full extent of the bad debts became known. The banking sector in South Africa has emerged relatively unscathed by the global credit crisis thanks to the strong regulation by the South African Reserve Bank, as well as the existence of the National Credit Act

Credit balance

The credit balance is the amount of money in your account when you are in the black. (or when you have a positive balance)

Credit Bureau

A credit bureau is a company that collects information from various sources and provides information on individual consumers for a variety of uses. This information, sometimes in the form of a credit rating (see below) helps lenders assess credit worthiness and the likely ability of someone to pay back a loan. Based on this information, lenders may refuse applications or decide appropriate interest rates. Some lenders charge different rates based on risk-based pricing – a form of price discrimination based on different expected risks of different borrowers, as determined by their credit rating. Wonga charges the same simple fee structure for all applicants. Examples of credit bureaux in South Africa are Transunion, Experian and xds.

Credit Bureau Association

The Credit Bureau Association or CBA is a voluntary association which aims to ensure that internationally recognized standards and information protection principles serve as guidelines for the fair and good practice in the consumer credit industry. It ensures the confidentiality, accuracy, relevancy and proper usage of data in accordance with international best practice. Its mandate is to provide a framework for a sustainable and well functioning credit information system.

Credit limit

Your credit limit is the maximum amount of money that you can borrow. This is set by the lender making the offer of credit to you. At Wonga we use a trust rating system that means your credit limit will be unique to you and will change according to how you use our service.

Credit rating

A credit rating assesses the ‘worthiness’ of an individual, corporation, or even a country. Credit ratings, also known as credit scores, are calculated from a number of factors including financial history and current assets and liabilities. Basically, a credit rating tells a lender or investor the probability or likelihood of the person being able to pay back a loan. A poor credit rating therefore indicates a high risk of defaulting on a loan, and thus leads to higher interest rates being charged or the refusal of an application. Wonga’s website provides helpful information on credit history and borrowing advice.

Credit report

A credit report is a document that summarizes your credit history. The information is gathered and updated by organisations such as the credit bureaux, banks, debt collecting agencies and retailers. It can include details of your borrowing, applications for credit, court judgements and bill payment behaviour. These reports are bought by companies to help assess applications for credit. You can get a copy of your own credit report from the credit bureau or other debt counselling organisations.

Credit Risk Evaluation

This is an assessment done by a credit provider to decide if credit should be granted to a consumer or not; what level of bad debt can be expected (if any), and what level of risk will be acceptable to justify the profit made.

Debit Card

When you pay for items or services by debit card, the money is taken directly from your bank account within a day or two of the transaction. There’s no credit involved unless you are spending on an overdraft facility.

Debt

Debt is money owed to a person or company. You can get more advice on debt matters on our website.

Debt ceded

This is where a consumer’s debt is sold to another party by the credit provider and the other party then collects the debt from the consumer

Debt counselling

If you feel you are drowning in debt, you can apply for debt counselling which will help you manage that debt. This is one of the benefits of the National Credit Act which came into effect in 2007. Debt counselling can protect consumers who are in debt from aggressive creditors who are quick to take legal action and not always willing to listen or understand the consumer’s problem. Debt counselling will protect the consumer from creditors taking legal action. In many cases both the consumer and creditor benefits from debt counselling: The consumer gets to pay more manageable monthly payments and the creditor benefits from not having to take expensive legal action

Debt counsellors

These are individuals registered with the NCR, who help over-indebted consumers to restructure their debt, either by way of negotiating with the credit providers including obtaining a court order on behalf of consumers

Direct Debit/Debit order

A direct debit or debit order is an instruction from you to your bank that allows someone else to take money from your account. The amount of cash taken can vary, but you must be told of the amounts and relevant dates before the money is removed. For example this allows you to pay regular bills automatically. When you apply for a Wonga loan, you will be asked to complete a direct debit authorisation form. This will allow us to collect your repayment via a direct debit on your chosen promise day. All you need to do is ensure there are sufficient funds in your bank account on that day.

Debt consolidation

Debt consolidation usually involves taking out one large loan to pay off a number of other, smaller commitments. This is often done to secure a lower interest rate, or for the convenience of having only one loan to think about repaying. It often involves converting a number of unsecured loans into one secured loan that’s tied to an asset (eg: a house or a car). Having collateral with which to secure a loan generally means lower interest rates because it reduces the risk to the lender.

Debt Restructuring

This is a process where a debt counsellor reviews a consumer’s credit agreement and reschedules the payment. The debt counsellor will first attempt to make a proposal to all credit providers in an attempt to get all parties involved to agree on the proposal. If an agreement is reach, the debt counsellor can request the Tribunal or a court to issue a consent. If an agreement is not reached, the debt counsellor may refer the matter to the Magistrate court. The Magistrate court must conduct a hearing and then make an appropriate order.

Debt Review

This is a process whereby a consumer’s credit agreements are combined in order to assess and establish if the consumer can afford the monthly repayments. Once a consumer is placed under debt review, credit providers may not take any legal action against the consumer.

Discounted rate

The discounted rate is a variable interest rate that is set at a fixed percentage amount below the lender’s standard variable rate, for a defined period of time. At the end of the discounted period, the interest rate reverts to the lender’s standard variable rate.

Doorstep loan

A doorstep loan is a personal, unsecured loan which is delivered by a local agent, literally to your doorstep. The amounts of cash involved are usually relatively low but the amount of interest charged is typically a lot higher than with a bank loan or credit card for example. Repayments are also collected via visits to your house.

EAR

EAR (apart from a thing that helps you hear stuff!) stands for effective annual rate. This is the amount of interest charged on an overdraft or loan stated as an annual rate. EAR differs from APR because it does not include any additional fees.

Early repayment

An early repayment is when you repay borrowed money prior to the arranged due date. Some credit providers don’t allow early repayment, whilst others charge penalty fees for doing this. Wonga doesn’t penalise customers who want to pay back their loan early and you’re welcome to request an early collection anytime. That way you only pay interest up to the day you fully repay the loan and can save money.

Equity

The word ‘equity’ has a number of different meanings. In the context of a company, equity refers to the ownership interest in that company in the form of common stock. Equity will normally be divided into equal parts which are owned by the shareholders. In terms of property, equity is the value of a property after you have paid off any home loan or other charges relating to it. Negative equity occurs when you owe more money than the property’s sale value

Equity release

This is a way of releasing the equity that is locked in an existing property either because it was originally purchased in cash or it has accumulated in value over time. It usually involves extending your existing home loan, or taking out a new secured loan against the value of your property.

ERTF

The exchange rate transaction fee is the charge you pay when withdrawing foreign currency from a cash machine or when paying for something in another currency by card. The foreign currency is converted into the bank’s ZAR equivalent and a fee, the ERTF, is charged for the service.

Fixed-rate interest

A fixed-rate interest rate is one that stays the same for a specific period of time.

Flexible mortgage/ loan

A flexible mortgage or loan is one that allows you to make overpayments and underpayments without penalty. In some cases, you can also take ‘payment holidays’ – when no payments are made at all for an agreed period.

Further advance

A further advance is an additional loan made by an existing home loan lender and secured by the first charge on the property. This can be used for a variety of things such as home improvement, house building or personal purposes such as debt consolidation. This means that your property must have increased in value in order to secure access to the further advance.

Garnishee Order

A garnishee order is a court order which gives your credit provider the right to attach part of your salary to pay off your outstanding debt.

Gross

This is the whole amount of a sum of cash, before any deductions such as tax or fees are made. Your gross salary is the amount you’re paid before tax and any other contributions are removed.

Gross interest rate

Interest earned before any income tax is deducted.

Guarantor

A guarantor is a person who guarantees loan repayments on a borrower’s behalf. A guarantor can sometimes be used to support a borrower who has insufficient income to qualify for a loan in their own right, or to make the loan proposition less risky for the lender

IFA

An independent financial advisor’s job is to help you sort out your finances and recommend products and services to meet your needs. IFAs in South Africa are regulated by the Financial Services Board (FSB). Some people find IFAs helpful as they can explain the pros and cons of different financial products. Financial advisers are usually paid by:

  • commission, often a percentage taken out of the money you pay or invest, or
  • an one-off fee, usually paid direct to the adviser, or
  • a combination of commission and fee.

Insurance policy

An insurance policy is one that pays money to the policy holder to cover losses in the event of theft or damage to a person or property. Insurance can also cover costs such as medical or legal fees. There are many types of insurance policies covering everything from travel and buildings to cars and pets.

Interest

Interest is what you pay for borrowing money, or what you receive for depositing savings. It’s expressed as a percentage rate over a period of time. There are various commonly used types of interest, like repo-rate and APR. It’s important to understand what they represent when comparing financial products likes loans and savings, but also vital to understand the actual cost of repaying any credit you’re considering

Interest-free

This describes a period when no interest is charged on money borrowed. It is common practice for retailers to offer interest-free deals on large items such as furniture and cars, to make the purchase more tempting. But always check the terms and cost of the credit when the interest-free period ends.

Interest-only

This is a loan on which you only repay the interest, not any of the capital, in your monthly payments. The amount of capital owed remains the same and must be repaid at the end of the term. When taking an interest-free home loan, for example, you will also need an investment vehicle to build enough cash to repay the capital at the end of the term.

Interest rate

This is the amount of money you pay for borrowing cash, or for depositing savings, expressed as a percentage of the amount you borrow.

Investment

An investment is something you put money, effort or time into to make a profit, or get an advantage from. In terms of money, this is usually something you pay for up-front, like a house, shares or work of art. It can also be something you put money into gradually like a savings account or pension.

Lifetime mortgage / home loan

This is a type of equity release product, usually for the over 60s, which allows you to release money by borrowing against the value of your home. It is still fairly new in South Africa and allows you to get cash up front, the interest compounds and when you die the bank sells the house, takes what it’s owed and any profit left over goes to your estate. Because no monthly repayments are made, this means more interest will build up than with a conventional mortgage or home loan.

Liquidity

In accounting terms, liquidity is a measure of the ability of a debtor to pay their debts when they fall due. It is usually expressed as a ratio or a percentage of their current liabilities.

Loan

A loan is money borrowed on condition that it is paid back under the terms agreed. There are lots of different types of loans, including a short-term cash advance from Wonga!

Loan period

This is the time for which money is borrowed, or the period over which payments are made until the loan and interest is fully settled. Another term for loan period is ‘repayment period’. Wonga loans are short term and the selected loan period can be any number of days up to a month.

Loan shark

A loan shark is an unregulated person or company who usually charges very large amounts of money for loans and behaves in an unscrupulous way. Repayment can be demanded via blackmail or threats of violence.

MFSA

Micro Finance SA is an organisation representing reputable micro financiers in South Africa. It is concerned with ensuring a sustainable Micro Finance Industry. Professional micro financiers do not exploit their clients and act strictly in accordance with established and ethical codes of conduct. They distance themselves from ‘loan sharks’ and insist that the authorities do everything in their power to rid the industry of them.

Mortgage

In South Africa a mortgage is also known as a bond or home loan. It is a type of secured loan used to help you buy property. The loan period is often 20 years or more and the lender has certain rights, including the right to take possession and sell the property if you don’t pay back the loan in line with an agreement.

Net

The net is the amount of something after all deductions, such as taxes or fees, have been subtracted from the gross amount. For example, your net pay is the amount of cash you receive after all tax and other deductions have been removed.

Net interest rate

The net interest rate is the rate of interest payable after the deduction of income tax at the rate specified by law. The rate of tax may vary depending on the circumstances, such as the income of an individual, so a net rate is usually only given as an example.

Nominal annual rate

This is the rate of interest that would apply if the interest were not added each year and if there were no inflation.

Ombudsman

This is an independent body created for the purpose of dispute resolution

Online banking

Online banking is also called e-banking or internet banking. It refers to banking services which are offered via the web. You can check your balance, transfer funds or order a new chequebook for example.

Online payday loans

These are Payday loans which are applied for over the internet. In reality, very few companies can offer a truly online service and many require the applicant to fax documents or speak to someone in a call centre. Wonga is not a payday loan company, but it is South Africa’s only truly online loan service – with no faxing, postage or phone calls required

Outstanding balance

This refers to the amount of borrowed money that you still need to pay back to the lender. Your outstanding balance usually reduces as you make payments against your loan, except in the case of interest-only mortgages.

Over-indebted

A consumer is over-indebted when he/she doesn’t have the means to meet all his/her debt payments at the end of a month. The NCA states that if a debt counsellor has completed an assessment and has reached a conclusion that a consumer will not be able to meet his/her debt commitments at the end of a month, then that consumer is over-indebted.

Overdraft

An overdraft is a bank facility enabling a customer to borrow an agreed amount (sometimes for an agreed time) against their account. Agreed overdrafts can be a very cost-effective way to borrow money for a short period of time, but unauthorised overdrafts of any amount often result in very large penalty fees.

Overpayment

Overpayment refers to making regular credit repayments for more than you are actually required to, or occasional ‘lump sum’ payments. Overpayments, where permitted, are normally made in order to settle a loan or home loan earlier than predicted. Many loans and mortgages don’t allow overpayment however as this reduces the amount of interest the lender will ultimately collect.

p.a.

This stands for per annum, meaning each year.

Payday loan

A payday loan (also called a paycheck advance or payday advance) is a short term loan that’s intended to cover the borrower’s expenses until his or her next payday. The lender usually charges a fixed fee and the loan is made until your next payday, regardless of when you apply. Payday loans often help people who can’t get credit elsewhere and have a reputation for encouraging customers to roll their loan from month to month. Used sensibly they can be a viable credit option for some.

Penalty charges

Penalty charges are a type of fee charged for breaking the terms of your banking or borrowing agreements. They can be incurred for things like unauthorised overdrafts, bounced cheques or failed debit orders.

Personal loan

Personal loans are offered by banks and other lenders to individuals for their personal use, such as to buy a car or pay for a holiday. Repayment periods typically vary from 6 months to 5 years, although Wonga offers a type of personal loan which can be taken for as little as one day.

PIN

PIN stands for personal identification number, which is a sequence of digits that you enter into a cash machine or card terminal when you want to access your account or complete a purchase. For security reasons, you should never give your PIN to anyone or write it down.

Pre-agreement statement

This is a statement that a credit provider gives to a consumer before entering into a credit agreement with the consumer. The statement contains the terms and conditions of the intended credit agreement

Promise date

This is the date that you say you will certainly repay your loan.

Rate

In this context, rate refers to the level of interest charged by a lender – ie: the rate of interest. This may vary depending on your personal circumstances and some lenders provide preferential rates for borrowers they view to be a ‘safe bet’. At Wonga we keep things simple and charge the same rate of interest for everyone we accept.

Reckless Credit

A credit provider must ensure that a consumer can afford the credit he/she is applying for before granting him/her the loan. If the credit provider fails to ensure this then the agreement is regarded as reckless. In order to avoid this, the credit provider must carry out a proper credit risk assessment; must not proceed to grant the consumer a loan when the consumer is not able to afford the loan based on the assessment conducted; must ensure the consumer understands his/her rights and obligations in the agreements as well as the cost involved in taking the loan.

Redemption penalties

Redemption penalties are fees that are sometimes charged on the early repayment of your loan; or on the repayment of a loan during a period of fixed interest. They are usually associated with home loans and are designed to stop customers easily remortgaging to take a better offer from another lender.

Remortgage

This refers to the process of changing mortgages (home loans) without moving home. Basically it involves moving a home loan from one lender to another to take advantage of a better product or interest rate, in order to save money. You use the money borrowed from the new mortgage lender to settle the old one. Most mortgage providers charge an administration fee and it may be necessary to have your home revalued.

Repayment mortgage

In a repayment mortgage the lender calculates your monthly repayments by spreading out your loan amount and your interest, so that the time your bond term finishes (for example 20 years) you will have paid everything off. Some lenders offer flexible repayment mortgages so that you can pay more than the agreed monthly amount if you have the money available.

Repo Rate

The repo rate is also known as the repurchase rate and refers to the rate at which the Central Bank lends money to local banks in the private sector. Changes in the repo rate influence the prime overdraft rate – this is the benchmark rate at which private banks lend to the public. When the banks lend money to consumers, the interest they charge can be above, at or below the prime overdraft rate. This rate is based on the consumer’s spending behaviour and credit history

Return

A return refers to profit received from activities like investing money in shares – ie: a return on your investment.

SARB

The South African Reserve Bank is the Central Bank of South Africa, and was established in 1921. It controls the amount of money in circulation (money supply)in the country, controls credit, supervises and regulates commercial banks, acts as a funding agent for the government and conducts a great deal of economic research. It also sets the country’s repo rate

SAMOS

The South African Multiple Option Settlement (SAMOS) system was introduced in 1998. It is an automated interbank settlement system provided by the South African Reserve Bank for banks to settle their obligations on an immediate real-time basis. Large-value payments are settled one-by-one on a real-time gross settlement (RTGS) basis, while retail payments are settled as a batch on a deferred basis. The SAMOS system is linked to the various participant banks, clearing systems and operators.

Secured loan

A secured loan is a loan where the borrower pledges an asset as collateral for the loan. The debt is then secured against the loan. Home loans are the most common type. All secured loans are a big commitment and carry significant risk, but you can often benefit from a lower rate of interest. They are typically used for large sums of money over several years or even decades in the case of home loans.

Share

A share is a unit of ownership in a company

Share certificate

This is a document that shows the amount of ownership

Share dealing

This is the process of buying and selling shares

Standing order

A method of making regular payments directly from your bank account. The transactions are for fixed sums on specific dates that you tell your bank.

Short term Loan

Short term loans are considered to be different things by different lenders. For example, a bank might consider a loan of one year to be a relatively short term loan. Wonga’s definition of a short term loan is a cash advance for up to 30 days, which you settle with one simple repayment on the date that you choose. Another type of short term loan is a payday loan, although these are a lot less flexible and potentially more expensive than Wonga.

Stock

This is another term for a share or multiple shares in a company.

Store card

Store cards work very much like credit cards, except they can only be used in a specific store, or store group, and often involve higher rates of interest. On the plus side, they can offer you discounts and other benefits while shopping at that store. It is easy to confuse these with loyalty or reward cards. It is also important to understand the difference between these and store-linked credit cards – such as those offered by Woolworths.

Transaction

A transaction refers to the movement of money. For example, when you pay money into or take money out of a bank account. It can also refer to a purchase in the case of a transaction with a shop.

Trust

Trust is confidence in the honesty, goodness, skill or safety of a person or a thing. Trust is one of the founding principles behind Wonga. Our trust rating means that as you gain our trust via your responsible use of our service, we gradually raise your credit limit and give you more borrowing flexibility if you ever need it.

A trust is also a legal arrangement in which a person or organisation controls property and/or money for the benefit of another person/organisation. This arrangement is often used for children so that adults can control their financial arrangements until they reach a certain age. Trust can also refer to an organisation that has responsibility for such a legal arrangement.

Unarranged borrowing

An overdraft that is higher than your bank has previously agreed to is classed as unarranged borrowing. It is also called an unauthorised overdraft and usually carries large penalty fees

Uncleared balance

This refers to the amount of money in your account including all the uncleared items in your account and any items paid in during the day

Unsecured loan

An unsecured loan is a loan when the lender does not have an immediate right to reclaim the loan value from an asset, (such as your property) should you fail to make payments towards the loan as agreed. An unsecured loan is still a serious commitment and there are significant penalties if you fail to repay it. Wonga cash advances and most other personal loans are classified as unsecured loans.

Variable-rate interest

This is an interest rate that you pay on your loan or mortgage that moves up or down based on changes in the underlying interest rate. These fluctuations are usually in line with the prime lending rate as set by your bank (which in turn is linked to the repo rate as set by the Reserve Bank

Wonga

Wonga is a slang term for cash or money, used in the UK and especially London (“A whole lotta Wonga”). It is originally from the Romany word ‘wanger’ (coal) – as coal was sometimes used as a casual term for money in England in the 18th and 19th Centuries. In South Africa, in the Nguni languages (which include Xhosa, Zulu, Swati, Hlubi, Phuthi and Ndebele) the word wonga means something of status, a prestige or an accolade.

ZAPS

ZAPS is South Africa’s interbank credit transfer system. It receives, validates & processes payment instructions; it calculates and processes interbank settlement obligations and informs the relevant parties. It assists the banks with their reconciliation processes and helps to minimises interbank settlement risk exposure.