Banking and Money Flashcards
Name some functions of money
Puts a value on objects
A means of exchange
A store of wealth
It gives us a credit system
What is money
Money is anything that is mostly excepted in exchange for goods and services
What do commercial banks do
They operate: Current accounts Deposit accounts ATMs Provide loans Night safes 24 hour banking service through the Internet Foreign currency exchange
What is a current account
An account that we use for day today expenses,
Name some services available with a current account
ATMs Standing orders Direct debit Cheque book Overdrafts Pay path
Is there a fee for current account services
Yes
What is an overdraft
When the bank let you to go into minus money. Give example. You pay interest on an overdraft
What does ATM stand for
Automated teller machine
Name some services an ATM provides
Check your balance
Take out money from your bank account
Top up your phone
What is an ATM operated with
A PIN number
What does a PIN number stand for
Personal identification number
What is pay path
How an employer pays an employee wages electronically directly into their bank account which makes it safer more convenient and faster
What is a standing order
Way to pay bills. You pay a fixed amount on a fixed date, when you tell, the bank to pay an amount of money to the 3rd party every week/month etc…
Give example
What is a direct debit
Way to pay bills but amount of money varies. You allow a third party to access your bank account, give example
What is the difference between DD and SO
SO is a fixed amount and DD is a varied amount.
What is barter
Is the swapping of one good for another
Explain a cheque
This is a written instruction to a bank to pay a stated sum of money to a stated person or to the bearer of the cheque
What is a bank draft
This is when in a cheque the bank is both the drawer and the drawee
Explain legal tender
Is the form of money that a creditor is legally obliged to take up in payment of debt
What is a credit transfer
This is a system where people can transfer money from their bank account to another persons bank account
In terms of cheques who is the drawer drawee and payee
Drawer is the person who makes out cheque
The drawee is the drawers bank
The payee is the person to whom the cheque is payable
Explain stale check
A cheque that has not been crashed or lodged within six months of the date written on it
Name three places to invest money
Deposit account
Shares
Property
Why do people save money
To purchase an expensive item
To earn interest
For precation
To provide for children’s education
What is DIRT
Deposit Interest Retention Tax
A Tax that reduces the amount of interest earned on saving money
What should a person consider before saving or investing
Interest rates
Tax, subject to DIRT
Convience- can you access money from ATM.
Factors to consider before borrowing
How long do the repayments last
How much is the interest on the loan/mortgage
Can I afford the repayments or do I have other financial commitments
Where can I get the best loan, mortgage
Explain mortgage
A long term loan used for purchasing a house. This loan requires collateral such as deeds to the house. Usually repayed over 20/30 years
Three requirements to open a bank account
Proof of address ex. Bill
Proof of identity ex. Passport
PPS number
Source of income
Give two differences between a current and deposit account
Current account may have an overdraft facility where more money than in account can be withdrawn. Deposit account only balance can be withdrawn
Deposit accounts gain interest. Not offered for current account mostly but sometimes is with a minimum amount of money in account
How are pension funds transferred to bank account
Electric fund transfer- pension is put directly into bank account by pension provider
Methods of withdrawing money for a current account
Withdrawal slip Cash back ATM Standing order Direct debit
Explain collateral
An item of value kept given to a financial institution from a borrower as a type of security on a loan. This can be sold or kept by the institution if loan is not repaid in full eg. Deeds to a house
