Learning aim A Flashcards
Understand the importance of managing personal finance
What are the functions of money?
Unit of account
Means of exchange
Store Value
Legal Tender
What factors effect the role of money?
- Personal attitudes towards risk, reward, borrowing, spending, and saving.
- Life stages
- External factors
- Interest rates
What are the benefits of planning expenditure?
- Surplus money to save
- Savings can provide security
- Good credit rating
- Avoid debt
What are the advantages of using Cash?
- Easy to budget
- Widely accepted
- Physical not digital
What are the disadvantages of using Cash?
- Easily lost
- Easy to steal
- Cannot be used online
What are the advantages of using a Debit Card?
- Secure
- Low risk of theft
- Can be used online
What are the disadvantages of using a Debit Card?
- May have minimum spending limits
- May overspend on card
- Potential to go into an overdraft
What are the advantages of using a Credit Card?
- Period if interest free credit
- Protection online
- Loyalty schemes / cash back
What are the disadvantages of using a credit card?
- Interest charged if not paid in full
- Encourages overspending and debt
- Charges on cash withdrawals
What are the advantages of cheques?
- Good for large transactions
- No needs to carry large amounts of cash
- Good for postal transactions
What are the disadvantages of cheques?
- Time delay between writing cheque and it being cleared
- Places are fazing out of this payment method
- Error made easily when writing
What are the advantages of using Contactless?
- Very popular
- Quick
- Safe
What are the disadvantages of Contactless?
- Limited amount of daily transactions
- Can one be used for small amounts
- Not available everywhere
What are the advantages of mobile banking?
- Convenient
- Secure
- 24/7
What are the disadvantages of using mobile banking?
- Limited features compared to Internet banking and banking in a branch
What are the advantages of using direct debits?
- Quick and easy
- Convenient for paying bills
- Good pay to stay on top of paying bill on time
What are the disadvantages of using direct debits?
- Needs monitoring to ensure correct amounts are being collected
What are the advantages of a standing order?
- Same amount is paid each time
- Easy to set up and cancel
- Easy to budgeting
What are the disadvantages of using a standing order?
- Payments are taken regardless of customers bank balance which may result in being overdrawn
- Payments will continue until cancelled
What are the advantages of using an electronic transfer?
- Fast method of payment
- Payment recorded
- Easy to do
What are the disadvantages of an electronic transfer?
- Could transfer to the wrong person
- Risk of loss if incorrect
- No appropriate for purchases in person
What are the advantages of pre-paid cards?
- Avoids overspending
- If lost can not be overdrawn
- Good way of controlling spending
What are the disadvantages of pre-paid cards?
- May cost money to set up
- No protection if lost
What are the advantages of a charge card?
- Get a shot period of credit
- No need to carry cash
- Additional perks
What are the disadvantages of a charge card?
- Full payment required each month
- Annual fixed fee
What are the advantages of store cards?
- Short period of interest fee credit
- Special offers and promotions for that store
What are the advantages of store cards?
- Can only be used in specified stores/places
- Interest is charged on balances
- Can encourage debt on consumer goods
What are the advantages of BACS?
- Guarantees instant payment within 2 hours
- No additional costs
- Used in brach, phone or online
What are disadvantages of using BACS?
- Limited amount in a single transaction
- Service not offered by all banks
What are the advantages of using CHAPS?
- No limit on the amount in a single transaction
- Same day transfer
What are the disadvantages of CHAPS?
- Fixed charge for the transition
What are the different types of current accounts?
- Standard
- Basic
- Premium / packaged
- Student
What are the advantages of a Standard current account?
- No charges on credit balances
- Range of facilities
- Convenient for receiving wages and withdrawing money
What are the disadvantages of a Standard account?
- Potentially high charges on overdraft
- Standard features, no additional perks
What are the advantages of basic current accounts?
- Available to customers with a low credit rating
- Easy first step for banking
- Ability to pay in and withdraw cash
What are the disadvantages of basic current accounts?
- Limited facilities
- No debit card
- Overdraft facilities
What are the advantages of student accounts?
- Course fees and loans can be easily handled
- Added extras are designed to meet the needs of students (rail and food card)
What are the disadvantages of student accounts?
- Overdraft facilities could encourage overspending
- Charges for overspending are high
- Limited facilities
What are the advantages of premium/packages accounts?
- No charges on credit balances
- Range of facilities
- Convenient for receiving wages and withdrawing money
- Additional perks ( travel insurance)
What are the disadvantages of premium/packaged accounts?
- Additional monthly charges
- May not provide value for money for certain individuals
What are the different types of borrowing products?
- Overdraft
- Personal loans
- Hire purchase
- Mortgages
- Credit cards
- Payday loans
What are the advantages of an overdraft?
- Flexible
- Quick to arrange
- There is no change is the customer pays off the amount of money owed quicker
What are the disadvantages of an overdraft?
- Interest rates can be high
- Bank can reduce the limit or cancel overdraft at any time
- Easy to stay in the overdraft
What are the advantages of using personal loans?
- Lower interest rates
- Easier to manage
- Help to pay for emergency expenses
What are the disadvantages of personal loans?
- Fee’s and penalties can be high
- potential credit damage
- Higher payments than credit cards
