1 - Methods Of Payment Flashcards
What are 2 advantages of using cash?
Most widely accepted form of exchange
Makes budgeting easier
What are 2 disadvantages of using cash?
Can be lost or stolen
Can’t be used for online purchases
What are 2 advantages of using a debit card?
No need to carry cash
Widely accepted, a secure method of payment
What are 2 disadvantages of using a debit card?
A short time-lapse between a transaction
Isn’t appropriate for small transactions
What are 2 advantages of using a credit card?
Allows an interest-free credit period
Suitable for online transactions
What are 2 disadvantages of using a credit card?
Interest is charged on balances not paid off
Can encourage overspending
What are 2 advantages of using a cheque?
A low-risk form of payment, the cheque can only be cashed by the payee
Widely accepted for face-to-face/postal transactions
What are 2 disadvantages of using a cheque?
Viewed as old-fashioned
Easy to make errors when writing the cheque
What are 2 advantages of using electronic transfer?
Almost instantaneous
Provides a record of payment
What are 2 disadvantages of using electronic transfer?
Risk of loss if the transfer is set up incorrectly
Not appropriate for face-to-face transactions
What are 2 advantages of using direct debit?
Easy way to make regular payments
Payment varies to match the amount required
What are 2 disadvantages of using direct debit?
Payee’s responsibility to claim the money back if the payer makes a mistake
Payer determines the amount each time, making it difficult to budget
What are 2 advantages of using a standing order?
Same amount is paid each time, making it easy to budget for the payee
Easy to set up and cancel as required
What are 2 disadvantages of using a standing order?
Payments are taken regardless of the customer’s balance
Payments will continue unless cancelled
What are 2 advantages of using a pre-paid card?
Can set a budget in advance
If lost or stolen, the loss is limited to what the remaining balance is
What are 2 disadvantages of using a pre-paid card?
No protection if it’s lost
Can require an initial fee to set up the card
What are 2 advantages of using a contactless card?
A secure method to make a payment
Fast and efficient to make a transaction
What are 2 disadvantages of using a contactless card?
Only accepted for small transactions
Still not widely accepted at outlets
What are 2 advantages of using a charge card?
Allows a short credit period
Offers a high spending limit or no limit at all
What are 2 disadvantages of using a charge card?
Payments must be in full monthly
Failure to repay results in very high late payment fees
What are 2 advantages of using a store card?
Allows a short period of interest-free credit
Offers cardholders specific loyalty benefits
What are 2 disadvantages of using a store card?
Only accepted in the store(s) specified
High interest rates on outstanding balances
What are 2 advantages of using mobile banking?
Convenient to use, can be accessed anywhere
More secure and risk free than online/internet banking
What are 2 disadvantages of using mobile banking?
It’s not available on all phones, may need a specific app
Can lead to extra charges from the bank
What are 2 advantages of using BACS/FPS?
Faster payment allows almost instant transfers
No additional costs
What are 2 disadvantages of using BACS/FPS?
Limit set on the amount transferred
Faster payment not offered by all banks, BACS may have to be used
What are 2 advantages of using CHAPS?
Transfers can be made on the same day
No limit on the amount of money you can send
What are 2 disadvantages of using CHAPS?
Usually a fixed charge for each transaction
Not a common payment method unless used for larger purchases
