A2 Different Ways To Pay

Question 1

Different ways to pay

Answer 1

Cash, credit card, debit card, cheque, electronic transfer, direct debit, standing order, pre paid, cards, contactless cards, charge cards , store cards, mobile banking, bankers automated clearing services ( BACS) clearing house automated payment system ( CHAPS)

Question 2

Cash and advantages and disadvantages of cash

Answer 2

Money that you carry in your pocket
Advantages -
It’s fast
It’s secure
No interest charges
Promotes carful spending / makes it easier to budget
It is inlusive too all
Does not require bank account or transaction

Disadvantages-
Could get stolen
Loose change, where as on a card it’s all together
Inconvenient to carry around
No earned rewards
Inconvenience for large transactions

Question 3

Debit card and disadvantages and advantages or debit cards

Answer 3

Debit card funds are taken from your current account with the money already in it

Advantages-
Widely used
Good security where you can freeze your cards
Can help you mange money
They are fast
It’s free to join
Easy to set up

Disadvantages-
Risk of being stolen
Fraud
Need to havw money in account for it to work
Can accidentally overspend and it ends in an overdraft
They don’t build up your credit score
Has a limit on spending before you need to put a pin in/ usually up too £100

Question 4

Credit card- and advantages and disadvantages

Answer 4

Allows you to spend money on pre approved credit offered by the bank where you then have to pay that money back back by the end of the month or or monthly payments

Advantages-
Can give you a chance for a good credit rating if used well - banks can see your a responsible borrower which can allow you for better opportunities for the future

Gives you the opportunity to spend on card now and then pay it back later

Allows you to spend large payments over monthly instalments and to spread out costs

Purchase protection

Intrest free- you can borrow money without any added interest

Disadvantages-
Can end up in really bad debt if you don’t manage your payments well
Can have damaged credit if you don’t pay back payments on time / can lead debt to stack up
Temptation to overspend
Could get stolen

Question 5

Cheque - advantages and disadvantages

Answer 5

A cheque is A cheque is a negotiable instrument instructing a financial institution to pay a specific amount of a specific currency from a specified transactional account held in the drawer’s name with that institution.

Advantages-
No need to carry cash
Transferring through cheques makes them more secure
Errors are unlikely to happen

Disadvantages
Processing time
Limited use
Cheques aren’t really popular no days

Question 6

Electronic transfer

Answer 6

Electronic transfer is An electronic funds transfer (EFT) is a digital transfer of cash through an online payment system.

Advantages-
Speed of transactions
Record of keeping
Can allow a large sums of money to be moved in a short time
More traditional

Disadvantages-

Cybercrime and new digital forms of money laundering

Question 7

Direct debit - advantages and disadvantages