a to z of finance

C is for current accounts, also known as cheque accounts because they can be used to pay bills and standing orders, direct debits and to withdraw cash. They were once the preserve of banks and never paid any interest. On the contrary banks charged customers for cashing cheques. Nowadays building societies offer current accounts, most current accounts earn interest and most banks still offer free banking if you keep a positive balance at all times. But interest rates are now derisory, the banks would love to start charging again, and woe betide anyone who inadvertently overdraws.

C is for coins, staple form of money until this century. Inflation rather than wear and tear erodes the value of coins and drives them out of circulation. Gold and silver coins have been withdrawn or disappeared when their face value fell below their metal value. Most coins are now tokens with little or no intrinsic value, although pound coins cost about 4p to make, and have a probable life of at least 40 years, which makes them a cheaper long-term bet than banknotes.

Gold sovereigns with a face value of just pounds 1 were withdrawn from circulation in the First World War and silver coins were last minted in 1946, although they remained in circulation until about 1972, when a surge in silver prices saw them all disappear. Gold and silver prices are currently low, but sovereigns are 22 carat and contain 0.2354 troy ounces of gold, today worth pounds 58.40, and a silver half-crown with a face value of 12.5p, minted between 1920 and 1946, is 50 per cent silver and contains 0.227 troy ounces, worth 73p at current prices. Even an old penny (0.42p) contains 1.2p worth of copper.

C is for currency funds, expressed in foreign currency and based in an offshore centre such as the Channel Islands. There are no real tax or interest-rate advantages but you will make a profit if sterling depreciates (and vice versa). Money is invested by buying and selling shares in a fund and the interest can be either distributed or accumulated. Interest is paid gross but is liable for UK tax, and accumulator funds are taxed as income when the money is withdrawn.

The minimum investment is about pounds 1,000. They cost nothing to open, but there is usually a management fee of around 1 per cent. Managed currency funds are actively managed to secure gains, but there is usually an initial charge of 3-4 per cent.