A.3 Current Accounts

Question 1

What are the four different types of current accounts?

Answer 1

1. Standard account
2. Basic account
3. Packaged/premium account
4. Student account

Question 2

What is a standard account and its features?

Answer 2

A normal account offered to customers with a reasonable credit rating. It includes standard features such as the ability to pay and withdraw money, a cheque book, a debit card, interest payments on positive balances and a pre-arranged overdraft limit.

Question 3

Give two advantages of a standard account

Answer 3

1. No charges on credit balances
2. Offers a wide range of facilities
3. Convenient for regular payments
4. Offers extra perks at a packaged price so it’s cheaper than buying individually

Question 4

Give two disadvantages of a standard account

Answer 4

1. Potentially high charges on the use of an overdraft

2. Standard features only

Question 5

What is a basic account and its features?

Answer 5

An account that offers only basic features and is available to people who might otherwise struggle to open a bank account due to poor credit rating. You can withdraw money but it does not offer an overdraft and does not pay interest on positive balances.

Question 6

Give two advantages of a basic account

Answer 6

1. Available to customers with low credit rating

2. Offers an easy first step for individuals to gain access to banking facilities

Question 7

Give a disadvantage of a basic account

Answer 7

1. Limited facilities

Question 8

What is a packaged/premium account and its features?

Answer 8

An account that offers additional features to a standard account, for example car and house insurance, credit card protection, breakdown cover and cash back on transactions. The bank may charge extra for this account.

Question 9

Give two advantages of a packaged/premium account

Answer 9

1. No charges on credit balances
2. Offers a wide range of facilities
3. Convenient for regular payments

Question 10

Give two disadvantages of a packaged/premium account

Answer 10

1. Additional monthly charges

2. May not offer value for money if the individual doesn’t make use of the perks

Question 11

What is a student account and its features?

Answer 11

An account designed to meet the needs of learners. Often they have overdrafts, incentives to join the bank, travel insurance. Banks are keen to attract learners as people tend to stick with the bank they first join.

Question 12

Give two advantages of a student account

Answer 12

1. Course fees and student loans are handled easily

2. Bonuses are offered for students

Question 13

Give two disadvantages of a student account

Answer 13

1. Overdraft facilities could encourage overspending

2. Charges for overspending are high