4. Serving Customers — Products and Services Flashcards
What are the four types of deposit accounts for specific groups or purposes?
- Basic bank accounts
- Deeming accounts
- Youth and student accounts
- Farm management deposit accounts
What are basic bank accounts?
Everyday transaction accounts designed specifically for low-income or disadvantaged people.
What are deeming accounts?
Everyday transaction accounts designed to provide pensioners or people over 55 years of age and retired with an account which reflects the Federal Government’s deeming rules.
What are youth and student accounts?
Low to zero cost accounts for students and children.
What are farm management deposit accounts?
A tax-effective account that allows primary producers to set aside pre-tax income as a cash reserve.
What are the three different types of savings accounts?
- Savings accounts
- Term deposits
- Retirement savings accounts
What are the characteristics of savings accounts?
- Used to hold medium to long term surpluses of funds
- Typically operated with a plastic card, mobile app or in a few cases by passbook
- Interest is paid by the bank, based on the amount of money lodged in the account
- Payment of interest will vary product to product
- Level of interest rate varies depending on both the balance of the account and the terms of the account
- Terms of the account will also affect the level of interest paid
- The account will tend to pay a higher rate of interest with a limited number of withdrawals
What are the characteristics of term deposits?
- Based on a single amount being lodged over a specified term
- Level of interest payable is dependent on many factors. As a general rule, the longer the investment term, the higher the rate
- The amount invested will also influence the interest rate, with high deposits attracting higher rates
- Terms offered generally range from 1 to 60 months (5 years)
- Withdrawal of funds prior to the selected term will generally incur penalties or a reduction in the overall interest payable
- Customers are also able to choose options regarding the regularity of interest payments and where they are paid either to their transaction account or added to the term deposit
What are the characteristics of retirement savings accounts?
- Capital guaranteed accounts offered predominantly by banks
- They don’t operate as a trust structure like other super accounts, but are subject to the same laws and restrictions and benefit from concessional tax treatment
- Introduced as a simple way for employers and employees to make small or irregular superannuation contributions
- Investment returns for RSAs are generally very low, and so they tend to have smaller account balances
What are the three key parties to a payment system?
- The customer
- The trader
- The bank
What are the six types of payment methods?
- Cash
- Cheques
- Debit cards
- Credit cards
- Automated payments
- Contactless payments
What are some facts about cash as a payment method?
The oldest method of payment and used mainly for smaller amounts. Its popularity amongst customers as a payment method is declining.
What are cheques?
A cheque is a written instruction that orders the bank to pay a third party a specified amount.
Who are the parties involved in a cheque?
The person writing the cheque is the drawer.
The payee is the person or company to whom the money is to be paid.
What are the proceeds of cheques that have not yet been paid called?
The proceeds of cheques that have not yet been paid by the drawee bank are known as uncleared funds or uncleared effects.
What are uncleared effects?
The proceeds of cheques that have not yet been paid by the drawee bank.
How can debit cards be used?
Can be used to pay for goods and services, withdraw cash from an ATM and access a range of services from ATMs.
What are credit cards?
Allows the customer to buy and receive goods and services now and pay for them at a later date.
How do credit card issuers generate income?
By charging:
- Commission to retailers who accept the card as a method of payment
- Interest to cardholders who do not repay their balance in full within a certain number of days of their credit card account statement date (typically 25 days)
How much do Australian banks typically require for minimum credit card repayments?
As a general rule, Australian banks require a minimum repayment of 2% of the outstanding balance or $25, whichever is the greater.
What are automated payments? What else are they called?
Include standing orders and direct debits and are payments that the customer has arranged to be made in advance. They tend to be used for regular payments from an account and are therefore also called pre-authorised payments.
What are contactless payments? To what limit are they approved up to?
Many outlets now operate a contactless system such as ‘tap and go’. This is a fast, easy and secure way to pay for purchases costing under $200.
What is crowd funding?
Crowd funding involves the use of online and social media channels to raise funds in support of a specific project or business idea.
How heavily regulated is crowd funding? By whom is it monitored?
Crowd funding is not prohibited in Australia nor is it generally regulated by ASIC.
However, ASIC has increasingly monitored the activity and has stated that some types of crowd funding could involve offering or advertising a financial product or service, which requires complying disclosure documents. As such, legal obligations could be imposed under the Corporations Act and ASIC Act.
