Financial Institutions Flashcards
Name all Financial Institutions (9)
- Building Society
- Bank
- Bank of England
- Credit Union
- Payday Loans
- Pawnbrokers
- Pension
- National Savings & Investments
- Insurance Companies
Building Society
Organisations that handle financial transactions & store money on behalf of their members. Members (account holders) are part owners of the building society and have a right to vote and receive information on the running of the society.
Bank
Organisation that handles financial transactions & store money on behalf of its customers
Pension
Business that sells policies to individuals either privately or through employers, to allow them to save now to fund their retirement in the future
Pawnbrokers
These are businesses or individuals who loan money against the security of a personal asset e.g an item of jewellery
Bank of England
The UK’s central bank with responsibility for maintaining a healthy level of financial stability for the UK as a whole
Insurance Companies
Business that sell protection against the risk of loss in return for a premium. They are profit making companies
National Savings & Investments
This is a government backed organisation that offers a secure savings option
Payday Loans
These are organisations that offer short-term source of finance to bridge the gap between now and next receiving a wage
Credit Union
Non-profit organisation that handles financial & store money on behalf of their members
Ad of Bank of England
- Set interest rates at a level designed to achieve a stable economy
- Lends to banks
Dis of Bank of England
- Not a bank of members of the general public
- Can raise interest rates making borrowing more expensive
Ad of Bank
- Offers a range of services & account types e.g current and savings accounts, loans
- Provide a secure place to store money
Dis of Bank
- Savings are only protected up to £85,000, if the bank goes bankrupt anything above this would be lost
- Profit-making organisations owned by shareholders, therefore costs to individuals may be higher to meet shareholder objectives
Ad of Building Societies
- Can offer better interest rates and savings than banks
- Owned by members so allows them to keep costs down, enabling higher interest payments
Dis of Building Societies
- Savings are only protected up to the value of £85,000- if the building society goes bankrupt anything above this would be lost
- May lack the business drive of a commercial bank
Ad of Credit Unions
- Owned by members and therefore costs can be kept down allowing higher interest payments
- They offer additional benefits to the community or to a good cause
Dis of Credit Unions
- Online access to your money may be restricted and some offer very little in the way of an online presence
- There are fewer ATM’s provided by Credit Unions
Ad of National Savings and Investments
- Offers a range of options e.g ISA’s, premium bonds and gilts
- Government backed, therefore offering security on 100% of savings with no upper limit
Dis of National Savings and Investments
- Rates are variable, no interest payments on premium bonds
- Often required to give notice on withdrawals
- Not easy to access due to lack of high street presence
Ad of Insurance Companies
- Offers a wide range of services and levels of cover to suit the needs of individuals
- Provide protection against unexpected losses or financial expenses
Dis of Insurance Companies
- Profit-making organisation therefore premiums will be charged to ensure the shareholder needs are met
- Premiums are assessed on the estimated degree of risk which may be seen to penalise some individuals or groups in society too harshly
Ad of Pension
- Experts are employed to make investment decisions
- Provides structure to help plan for financial security after retirement
Dis of Pension
- Poor investment decisions by the pension company may result in a disappointing return on investments
- Money already invested in a pension cannot be released prior to the dates agreed in the policy and penalties if taken out early
