A2 Flashcards
What’s are the different ways to pay?
Cash Credit cards Debit cards Cheque book Store cards
What is cash?
Notes and coins can be found in a wide range of denominations and is widely accepted.
What are the advantages of cash?
- Most widely accepted form of exchange
- It’s physical not virtual money
- Makes budgeting easier
What are the disadvantages of cash?
- It can be lost or stolen
- There is a threat of counterfeit notes and coins
- Notes and coins can’t be used online
What is a debit card?
- Issued by banks with payments for goods and services being deducted directly from a current account.
- The deductions can be immediate
What are the advantages of a debit card?
- No need to carry cash
- It’s a secure method of payment
- It’s widely accepted everywhere
- Suitable for online purchases
What are the disadvantages of a debit card?
- Some shops have a minimum payment of £5
- Can be delayed when paying for things can result in overspending
What is a credit card?
- Issued by financial institutions not necessarily banks
- They allow customers to delay payments for goods and services
What are the advantages of a credit card?
- Allows a period of credit that is interest free
- Most are widely accepted
- Suitable for online transactions
- Offers a degree of protection on purchases
What are the disadvantages of a credit card?
- Interest is charged on balances not paid within one month
- Interest is paid on cash withdrawals typically 2.5%
- Can encourage a customer to overspend and get into debt
What is a cheque book?
A cheque is a written order to a bank to make a payment for a specific amount of money from one account to another account
What are the advantages of a cheque book?
- Low risk of payment as the cheque can be only cashed by the named payee
- Can be written as an exact amount
What are the disadvantages of a cheque book?
- Expensive for you if the bank bounces the cheque because a fee has to be paid
- It’s now viewed as an old fashioned method of payment
