Money And Banking Flashcards
Barter
Swapping goods with each other
Money
Anything generally accepted by the majority of people in exchange for goods and services
Legal tender
Issued by the Central Bank and must be accepted as payment
Currency
Official money of a country
Functions of money
Medium of exchange (used to buy things)
Measure of value (measuring the price of things)
Store of wealth (a way of saving)
Features of money
Portable
Durable
Divisible
Confidence - people must believe it’s genuine
Saving
Not spending money
Investing
Putting your savings to work to earn extra income called interest
Why do people save
To pay for something they can’t afford right now
To provide an income for the future
In case of unforeseen events
What to consider when choosing a financial institution
Safety
Tax (DIRT)
Interest
Convenience
Formula for simple interest
Sum saved X time X rate of interest
————————————————
100
What does CAR stand for
Compound Annual Rate
DIRT
Deposit Interest Retention Tax
Tax paid on the interest that you receive from your savings
Financial institutions
Commercial banks
Building societies
Credit unions
An Post
Opening a current account
Photo identification Proof of address Specimen signature Contact information Date of birth PPS number
Paypath
Wages is lodged directly into current account by employer
Advantages of pay path
Employer doesn’t need large amounts of cash on the premises
Employer does t need to fill in chequers
Employees don’t need to go to the bank
Payments from a current account can be done by
Cheque Credit transfer Bank draft Standing order Direct debit
Credit transfer (C/T)
Used to make a single payment to someone else’s account, a giro is used
Bank draft
A special form of cheque drawn by the bank, mainly for very large payments
Standing order (SO)
An instruction to pay a FIXED sum into a bank account at regular intervals
e.g loan repayments or rent
Direct Debit (DD)
Permission given to a company to take money directly from the customer’s account, the SUM varies
Stale cheque
A cheque presented to the bank more than 6 months after it has been written
Blank cheque
A signed cheque with at least one piece of information left out
Endorsed cheque
The payee has signed the back of the cheque so someone else can negotiate it
Negotiating a cheque
Cashing in a cheque
Post-dated cheque
A cheque with a date in the future on it
Receipt cheque
A cheque that must be signed by the payee to negotiate it
Dishonoured cheque
A cheque that the bank refuses to pay out
Perhaps the drawer doesn’t have enough money
Stopped cheque
The drawer instructed the bank to dishonour the cheque
Crossed cheque
Two parallel lines on the cheque meaning the cheque must be paid into a bank account
Open cheque
A cheque not crossed
Forms of money
Barter Legal tender Chequers Plastic cards - debit/credit card Currency
