A to Z of bank terms

This glossary is to help you understand information we send you or on our website. We try to explain things clearly and simply.

For help with more complex words and phrases we use for our mortgage products, please view our mortgage terms glossary.

What this glossary does not do:

  • We do not attempt to give legally accurate definitions of words and phrases.
  • This glossary does not replace our Glossary of EU Standard Language for Payment Services. This sets out the standard terms and definitions for common payment account services as provided by the Central Bank of Ireland.
  • This glossary is not legal or financial advice. If you need legal or financial advice, you need to ask your solicitor or financial adviser.
  • This glossary does not have any effect on any terms and conditions (see terms and conditions in this glossary).
  • It does not change any information we give you about our products.

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A


  • Affordability
    Affordability means how much you can afford to repay on a loan, like a mortgage, credit card, or personal loan. When you apply for a loan, we check your income, savings and spending to make sure you can afford to keep up with the repayments.

  • Alternative Repayment Arrangement (ARA) 
    This is where we agree with a borrower to put in place a new payment arrangement for a loan or mortgage loan to help a borrower who is struggling to make their usual loan repayments. For example, we might change the amounts that need to be paid in each repayment or the dates when payments need to be made. We might also change the interest rate or the maturity date of the loan. See maturity date.

    We may also call this a revised repayment arrangement.

  • Annual Percentage Rate (APR)
    The Annual Percentage Rate (APR) is the total cost of credit over a year, including interest and any fees. The APR for a credit card includes Government stamp duty. See Stamp Duty.

  • Amortising loan
    An amortising loan is one that is repaid over an agreed period of time by regular repayments, typically monthly repayments. Each repayment includes money to pay interest and to repay part of the loan. The repayment instalments are usually calculated so that the loan is repaid in full by the agreed maturity date. See maturity date. Personal loans and mortgage loans are usually amortising loans. If we charge a variable rate on the loan, the amount of a repayment instalment will go up if an interest rate goes up; and will go down if an interest rate goes down.

  • Amortisation table
    A table that lists out the repayment instalments to be paid in an amortising loan and the dates on which they are to be paid (or a summary of those dates).

  • Arrears
    These are missed payments on a loan or credit agreement. In other words, they are payments or amounts that are overdue. It can also include interest on the overdue amounts.


B


  • Bank Identifier Code (BIC)
    This is a unique number that identifies your bank. It is the code needed, together with your IBAN (International Bank Account Number), to send and receive electronic international payments.

    The BIC for Bank of Ireland accounts in the Republic of Ireland is BOFIIE2D.

  • Business Contract Plan (BCP)
    BCP is a type of motor finance for business customers, where they pay monthly instalments to use a vehicle. At the end of the agreement, they can choose to either:

    • Buy it
    • Return it to the dealer, or
    • Change the vehicle, by taking out a new BCP agreement.

  • Buy Now, Pay Later (BNPL)
    BNPL is a way of buying something immediately but paying for it over a fixed period, usually in instalments.


C


  • Credit report
    A credit report shows details about your borrowing history so that lenders can see how you manage credit, such as loans, mortgages and credit cards.


D


  • Death certificate
    This is an official document that confirms someone has died. In the Republic of Ireland, they are given by the General Register Office.

  • Default
    This is where repayments of a loan are not made as agreed in the credit agreement. A default can also happen if borrowers do not meet their promises to do something under a loan agreement. For example, if they do not insure a house or their life.

    If a default happens, we may demand that the borrower repays the loan early.

  • Direct debit
    This is where you agree to a company or organisation instructing Bank of Ireland to allow the company or organisation to ‘collect’ or take a payment from your bank account.

    The amount of money can vary. You must be told the amounts and dates by the company or organisation before they happen.

    Note: You can also read the Central Bank of Ireland’s definition of a direct debit in our Glossary of EU Standard Language for Payment Services.

  • Drawdown
    This is when we release the money to you for a loan or mortgage. It is the point when the bank transfers the money to you or on your behalf, and the loan officially begins.


E


  • Estate
    This is everything a person owns. When talking about a deceased person, it means all the money and property they owned when they died.

  • Executor
    This is someone named in a will who is to carry out the wishes of the person who made the will.

    An executor is a type of personal representative.


F


  • Fraudulent transaction
    A fraudulent transaction is a transaction on an account that you have not authorised. This can happen if your card details have been compromised or your card has been lost or stolen.


G


  • Grant of Administration
    This is a document given by the Probate Office when a person dies without making a will. It can also be called a Grant of Letters of Administration or Letters of Administration. A Grant of Administration with Will Annexed is given by the Probate Office when there is a will but a Grant of Probate cannot be given, for example because there are no living executors who are willing to act. See executor.

    The document names the people who have the duty to deal with the money and property of the deceased person. They are called administrators.

    An administrator is a type of personal representative.

  • Grant of Probate
    This is a document given by the Probate Office when a person dies and has a valid will which names executors who are alive and willing to act. See executor.

  • Guarantee/Guarantor
    A guarantee is a formal written promise made by someone (called a guarantor) to repay a loan or debt if a borrower fails to do so.

  • Guaranteed Minimum Future Value (GMFV)
    This is the minimum amount a motor dealer agrees to pay for your vehicle at the end of a Personal Contract Plan (PCP) or a Business Contract Plan (BCP) finance agreement.


H


  • Hire purchase agreement
    Hire purchase is where Bank of Ireland buys an asset on your behalf, for example a car. You then hire the asset from Bank of Ireland and pay an agreed amount every month. You do not own the asset until you have made the final payment.

  • Hirer
    A hirer is the person who agrees to pay to use something—like a car or equipment—under a hire purchase or hire agreement.


I


  • International Bank Account Number (IBAN)
    This is a long, unique number for your bank account. It is used with your Bank Identifier Code (BIC) for international transactions and on its own for domestic bank transfers.

  • Indemnity
    An indemnity is a promise given by a person to protect someone else from financial loss or damage. Some of the forms we ask customers to sign include an indemnity.

    For example, we ask a customer to sign an indemnity if they lose a bank draft and ask us to replace it with a new one. If we allow people to take money out of the account of a deceased person without a Grant of Probate or Grant of Administration, we usually ask them to sign a form that includes an indemnity.

  • Insolvency
    Insolvency is where a person or business is unable to pay their debts when they are due. For example it can refer to a customer who cannot meet loan or credit repayments.

    Insolvency can also happen in a company or business when the value of all the money and assets it owns are less than the amount of the debt it owes.

  • Insurance Premium Finance
    Insurance premium finance is a loan that helps a business spread the cost of large insurance premiums, by paying monthly instalments instead of one lump sum.

  • Interest rate
    Interest is the cost of borrowing money or the reward for saving it.

    An interest rate is the percentage rate used to calculate the interest on money borrowed or saved. We usually show our interest rates as annual rates.

    A fixed interest rate does not change for an agreed period of time.

    We can change a variable interest rate up or down.

  • Intermediary
    Is someone who helps people to get loans or other products from a bank, an insurer or other financial services company. They are also called brokers.


J


  • Joint account
    Joint accounts are personal and business bank accounts that you can open in the names of more than one person.

  • Joint and several liability
    Joint and several liability is a legal term used when two or more people borrow money together (or take on other legal obligations together). It means that each person is responsible for the full amount of the debt on their own as well as being responsible for it together.


L


  • Lease agreement
    A lease agreement is a contract where you rent an asset for a fixed period, for example a vehicle. You make regular payments, but you do not own it.

  • Lessee
    A lessee is the person or business that rents a vehicle from someone else under a lease agreement.

  • Letters of Administration
    This is the same as Grant of Administration. See Grant of Administration.


M


  • Maturity date
    If you have a loan, the maturity date is the date when the amount of money you have borrowed is due to be paid off in full. See amortising loan.

  • Monthly repayment
    The amount you pay each month to pay back money you have borrowed including any interest.


O


  • Overdraft
    An overdraft provides extra financial flexibility when you need it.

    It is a short-term borrowing option that lets you take out or spend more than you have in your current account, up to an agreed limit so that your account is then ‘overdrawn’.

    If your account is overdrawn, we charge interest on the full amount by which your account is overdrawn.

    We also charge interest on an unauthorised overdraft. See unauthorised overdraft.

    Note: You can also read the Central Bank of Ireland’s definition of an overdraft in our Glossary of EU Standard Language for Payment Services.


P


  • Personal Contract Plan (PCP)
    PCP is a type of car finance where you pay monthly instalments to use a car. At the end of the agreement, you can choose to either:

    • Buy it
    • Return it to the dealer, or
    • Change the vehicle, by taking out a new PCP agreement.

  • PIN
    PIN stands for Personal Identification Number.

    For example, this is the four-digit number that you enter into a cash machine when you want to take out cash, or that you use when you make a payment with your debit or credit card.

  • Probate
    This is the process of proving that a will is valid.


S


  • Secondary Lease
    This is an optional extension of a lease agreement. It allows you to continue using the asset after the initial lease period has ended.

  • Security
    Security refers to an asset that a customer provides to a bank to secure a loan or credit. It gives the bank the legal right to sell the asset if the customer fails to repay the debt. For example, in a mortgage loan you give the bank security on your home or property by signing a deed of mortgage.

  • SEPA
    SEPA (Single Euro Payment Area) is a system that makes it easy to send and receive euro payments across European countries. It is just like making bank payments here in the Republic of Ireland.

  • Sort code
    A six-digit number that identifies the branch of a Bank in Ireland. Every branch has its own sort code.

  • Stamp duty
    Stamp duty is a tax you pay to the government when you buy a property or land. In the Republic of Ireland, the government also charges stamp duty on credit cards, debit cards and bank drafts.

  • Standing order
    A standing order is used for making regular fixed payments. It moves money from your own bank account to another account. This might be to an organisation or an individual, or from your own current account to your savings account.

    Note: You can also read the Central Bank of Ireland’s definition of a standing order in our Glossary of EU Standard Language for Payment Services.


T


  • Terms and conditions
    Terms and conditions make up the contract between a bank or other company and its customers. For example, they set out the rights, responsibilities, and obligations of both you and the lender in a loan agreement. We have sets of terms and conditions for our different loan products, for example a mortgage loan, personal loan, overdraft or credit card contract. We also have terms and conditions for current accounts and deposit accounts.

  • Transaction
    Transactions on your account are where money is paid into or out of it.
    This includes:

    • Lodgements. Money paid into your account.
    • Withdrawals. Money taken out at a branch or ATM.
    • Payments. Direct debits, standing orders or card purchases.
    • Loan payments made to a loan account.


U


  • Unauthorised overdraft
    This is when your account is overdrawn and we have not agreed to give you an overdraft.

    If we have agreed an overdraft limit and you overdraw more than we agreed, the money over the agreed limit is also an unauthorised overdraft.

    You should avoid an unauthorised overdraft as it breaks the rules in the terms and conditions. See terms and conditions.

    Note: You can also read the Central Bank of Ireland’s definition of an unauthorised overdraft in our Glossary of EU Standard Language for Payment Services.

  • Unpaid item
    An unpaid item is when a bank does not pay a cheque, direct debit or standing order on a current account. It may happen if there is not enough money in the account to pay the cheque, direct debit or standing order.

    Other reasons that an item is unpaid include where a cheque is out of date or you have told us to stop a cheque.

    Note: You can also read the Central Bank of Ireland’s definition of an unpaid item in our Glossary of EU Standard Language for Payment Services.


W


  • Wear and Tear agreement
    A Wear and Tear Agreement is an agreement between a customer and their motor dealer. It describes the level of wear and tear that is considered acceptable when the vehicle is returned at the end of a Personal Contract Plan (PCP), Business Contract Plan (BCP), Hire Purchase Agreement or Contract Hire Agreement.

  • Will
    A will is a legal document a person signs to say what they want to happen to their money and property after they die. There are special rules about how a will is to be made and to be witnessed. If these rules are not followed the will may not be valid. It is important to get advice from your solicitor about anything to do with wills.

  • Working capital
    Working capital is the money a business uses for its day-to-day operations.