Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

BTEC Business > A4: Managing Personal Finance > Flashcards

A4: Managing Personal Finance Flashcards

1
Q

Overdraft definition

A

the facility to overspend on a current account up to an agreed sum

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

personal loans definition

A

a set amount of money provided for a specific purpose, to be repaid with interest over a set period of time

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

hire purchase definition

A

allows an individual to have use of an item immediately but pay for it in regular instalments. the property is only owned by the individual when the final instalment has been paid.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

mortgages definition

A

a long term loan to fund the purchase of a property and is repaid over a long period of time e.g. 25 years.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

credit cards definition

A

allows an individual to pay for goods or services on a card with with a statement issued at the end of each month. the balance can be paid in full without incurring interests or in smaller amounts with interest charge

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

payday loans definition

A

a short term source of finance that can help to bridge the gap between the present moment in time and receiving a wage

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

advantages of overdraft

A

Interest is charged only on the amount outstanding

Can be paid off without penalties

Can be prearranged and only used if needed

Provides a short-term solution to cash flow problems

Don’t lose ownership of the business

Easy to get

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

advantages of personal loans

A

Pay over a large period of time

Can budget as it’s the same amount every time

Don’t have to ask family or friends

Don’t lose ownership

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

advantages of hire purchase

A

Spreads the cost of an expensive item over a long period of time

Credit is secured against a specific item

Allows the customer to afford something that they wouldn’t otherwise be able to

Own the product once the final instalment has been paid

Don’t lose ownership of the business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

advantages of mortgages

A

Allows the customer to spread the cost of an expensive property over a long period of time

Interest rates may be fixed depending on the mortgage deal

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

advantages of credit cards

A

If repaid quickly can avoid or reduce interest

Can be used for items of multiple sizes and value, to a limit, without need to secure against

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

advantages of payday loans

A

Help secure immediate short term cash flow problems

Relatively easy to secure

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

disadvantages of overdraft

A

Interest is often high

High Penalties for going over prearranged limit

Could encourage overspending

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

disadvantages of personal loans

A

Interest charged

If not paid can lead to poor credit rating

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

disadvantages of hire purchase

A

Interest charged

Ownership of the product is the sellers until final payment is made

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

disadvantages of mortgages

A

Payments can fluctuate

May not be accepted if have poor credit rating

Requires a substantial deposit e.g. 20%

Risk of repossession if payments aren’t met

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

disadvantages of credit cards

A

Can encourage overspending

Higher interest rates than on other sources of finance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

disadvantages of payday loans

A

Very high interest rates

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Individual Savings Accounts (ISAs) definition

A

a tax-free way to save or invest

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Deposit and savings accounts definition

A

an account where interest is paid on the balance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Premium bonds definition

A

a government scheme that allows individuals to save, up to a set amount, in bonds. no interest is earned but the bond is placed into a regular draw for cash prizes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Bonds and gilts definition

A

these are fixed term securities where the individual lends money to companies and governments in return for interest payments

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Shares definition

A

investments in business in return for equity. the shareholder becomes a part owner of the business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Pensions definition

A

long term savings plans where individuals make regular contributions through their working life. this is then repaid upon retirement, either as a lump sum or in regular payments

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
advantages of Individual Savings Accounts (ISAs)
no tax charged on interest interest rates can be higher than standard savings accounts
26
advantages of Deposit and savings accounts
interest earned on positive balances Accounts sometimes require regular deposits of a set amount forcing the saver to follow a savings plan
27
advantages of Premium bonds
Chance of winning large amounts of money
28
advantages of Bonds and gilts
Regular fixed returns spread risks across range of markets
29
advantages of Shares
Share prices fluctuate offering potential high reward can get payed in dividends
30
advantages of Pensions
Encourages individuals to save throughout their working life Depending on policy individuals' savings can be boosted by employer's contribution
31
disadvantages of Individual Savings Accounts (ISAs)
Notice may be required to make a withdrawal Can be a limit of number of withdrawals per year if not obeyed penalty’s my come into place limit set on annual amount you can put in every year
32
disadvantages of Deposit and savings accounts
Interest earned is taxed The percentage rate on savings is likely to be lowered than interest to be paid on borrowing, therefore the benefits of savings are lost if the customer is borrowing at the same time
33
disadvantages of Premium bonds
No guaranteed return on investment can only get interest if you win
34
disadvantages of Bonds and gilts
Risk of losing value of investment if value falls Interest payments may not be paid if unable to make payment
35
disadvantages of Shares
share prices fluctuate leading to potential high risk no guarantee of reward
36
disadvantages of Pensions
movement between jobs can lead to different policies stopping and starting If compulsory payments are deducted it can affect living standards
37
types of insurance
Car, Home and contents, life assurance and insurance, travel, pet, health
38
car insurance definition
to cover both theft and accidents - there is a legal requirement to insure any car that is on the road and this protects the driver, passengers and other road users
39
Home and contents insurance definition
Home - covers the physical building against events like a fire or flood damage contents - covers the physical items inside the house and when they are used away from home.
40
life assurance and insurance definition
Life assurance - an ongoing policy to pay a lump sum upon death life insurance - a policy for a set period of time (e.g. mortgage term) to pay a lump sum if you die within that period
41
travel insurance definition
protects individuals or groups while abroad. cover usually includes illness, loss or theft of property, cancellation and emergencies up to predetermined limits
42
pet insurance definition
protects the owners of pets against some or all of the expenses associated with treating an injured or sick animal e.g. vet fees
43
health insurance definition
covers individuals, families or employees against medical expenses including assessments, treatments and loss of earnings. in the uk, this can pay for private treatment or payment plans for routine visits e.g. to the dentist
44
6 Types of borrowing
``` Overdraft Personal loans Hire purchase Mortgage Credit card Payday loans ```
45
Net current assets
Current assets - current liabilities
46
Current assets
Things a business owns which can be turned into cash quickly/easily
47
Current liabilities
Things a business owes which have to be paid quickly
48
Examples of current liabilities
Overdraft, trade credit, trade payables
49
risks of saving
Low or zero risk as money saved is guaranteed to be available in the future Inflation can reduce the spending power of money saved
50
risk of investment
Investments can go wrong and all or some of the value may be lost No guarantee of return
51
rewards of saving
Interest payments Financial security/peace of mind
52
rewards of investment
If successful, there is a potential for high financial return Can be exciting
53
car insurance advantages
Meets legal requirement Depending on cover can protect form damage to your vehicle, third party vehicle fire and theft
54
car insurance disadvantages
Premiums can be high depending on an assumed level of risk, premium is always higher for younger drivers. Normally there is an excess e.g. first £500 has to be payed by you and rest is covered by insurance company
55
home and contents insurance advantages
Protects against damage that may be expensive to repair if something did happen Contents are protected both inside and outside of the home
56
home and contents insurance disadvantages
Premiums are an additional expense to owning a home some items cant be replaced due to a value beyond wealth (if their sentimental) such as inherited jewellery
57
life assurance and insurance advantages
Provides a peace of mind to family following the bereavement of a homeowner
58
life assurance and insurance disadvantages
If the homeowner doesn’t die in the period of life insurance no payment is made
59
travel insurance advantages
Provides protection for belongings Covers medical costs when on holiday Protects against cancellation
60
travel insurance disadvantages
The person suffering is likely to have to pay upfront costs to replace items or cover medical costs
61
pet insurance advantages
Avoids expensive vet fees If fees are too high, they may have no choice but to put the pet down, insurance can prevent this
62
pet insurance disadvantages
An additional monthly expense to protect them against the unexpected
63
health insurance advantages
Provides some compensation to ill patients allowing them to focus on recovering rather than having the burden of their finances on their mind. Some people can even have private healthcare which often results in better facilities and quicker treatment
64
health insurance disadvantages
Paying for something that you hope you won’t have to use Premiums can be expensive and it won’t cover pre known conditions

BTEC Business (3 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions