A3 current accounts

Question 1

what is a current account?

Answer 1

-a type of bank account that keeps your money secure and helps you manage your finances

-facilitate the making of payments (direct debits, standing orders) and lets people and businesses pay you easily

Question 2

what are common features of a current account?

Answer 2

-incomings (wages)
-outgoings (bills, direct debits)
-overdraft
-interest paid on positive balances
-interest charged on negative balances
-additional extras

Question 3

what are the 4 different types of current accounts?

Answer 3

standard, basic, premium, student

Question 4

what are the features of a standard account?

Answer 4

-standard features, pay in and withdraw money
-recieve a debit card
- interest payments on positive balances
-pre-arranged overdraft limit

Question 5

what are the features of a premium account?

Answer 5

-contains standard features, but also pay a monthly fee to recieve additional benefits: breakdown cover, cashback on purchases, home insurance and payment protection.
-bank may add additional charges so may not always be value for money

Question 6

what are the features of a basic account?

Answer 6

-limited features, used by people who have a poor credit rating
-no overdraft
-no interest on positive balances

Question 7

what are the features of a student account?

Answer 7

-designed to benefit students
-interest free overdraft
-incentives like railcards and discounts off eating out

Question 8

what are the advantages of a standard account?

Answer 8

-no charges on credit balances
-offers a wide range of facilities
-convenient for recieving regular payments and withdrawals

Question 9

what are the disadvantages of a standard account?

Answer 9

-potentially high charges on the use of an overdraft facility
-standard features only

Question 10

what are the advantages of a premium/packaged account?

Answer 10

-no charges on credit balances
-offers a wide range of facilities
-convenient for making and recieving payments
-offers additional extras at a packaged price (cheaper than they would be individually)

Question 11

what are the disadvantages of packaged premiums?

Answer 11

-additional monthly charge applied frequently
-package offered may not offer value for money or meet the needs of the account holder

Question 12

what are the advantages of a basic account?

Answer 12

-available to customers with low credit ratings
-offers an easy first step for individuals to gain access to basic banking facilities (paying and withdrawing cash)

Question 13

what are the disadvantages of a basic account?

Answer 13

-limited facilities e.g. no debit card or overdraft facility

Question 14

what are the advantages of student accounts?

Answer 14

-course fees and student loans can be easily handled
-bonuses offered are designed to meet student need’s e.g. discounts on travel or small lump sum cash payments.

Question 15

what are the disadvantages of student accounts?

Answer 15

-overdraft facilities can encourage overspending
-charges for overspending are often high
-limited facilities