Payment Methods Flashcards
what is a debit card?
A card allowing the holder to transfer money electronically from their bank account when making a purchase
debit card advantage
faster payments
no interest charges
debit card disadvantage
no credit allowed
have to have the money
limit to your balance
what is a credit card?
a credit card lets you borrow money from a bank or building society which you can use to purchase goods or services
credit card advantage
build a credit score
protection against card fraud
credit card disadvantage
easy to overspend
high interest rates
limit on what you spend
what is a cheque?
an order to pay the bank to pay a state sum
cheque advantage
more convenient than cash
payment can be stopped
cheque disadvantage
customers can stop payments
doesn’t guarantee payments
what is direct debit?
a financial transaction in which one person withdraws funds from another persons account, to go out in the same time every month week etc
direct debit advantage
safe and easy for paying bills
no risks for late payments
direct debit disadvantage
overpayments
interest on overdraws
what is a pre-paid card?
they are a reloadable card, you can add cash to them and top them up when funds run out (voucher)
pre-paid card advantage
safer than carrying cash
no worry about debt
pre-paid card disadvantage
fee to get the card
keep using it and topping it up
what is mobile banking?
financial transactions on your mobile phone
mobile banking advantage
can bank anywhere
can see all your money going in and out
mobile banking disadvantage
security concerns
long time to set up
what is a charge card?
a card that enables the cardholder to make purchases which are paid for by the card user
charge card advantage
no limits
gains credit score
charge card disadvantage
more expensive than credit cards
high interest if not paid off
what is CHAPS?
real time gross settlement payment system used for sterling (£) transactions in the uk
CHAPS advantage
secure
some day payments
CHAPS disadvantage
£30 each use
most bank charge £20
What is a store card?
a credit (points) card that can be used only in one store or chain of stores
store card advantage
membership perks
big discounts
store card disadvantage
have low limits on them
only be used in curtain places
what is BACS? (bankers automated clearing services)
A uk automated payment methods direct debit and bacs direct credit that banks use
BACS advantage
helps manage transactions
saves time
BACS disadvantage
only can do payments on business days
payments takes three days to clear
what is cash?
is legal tender currency or coins that can be used to exchange good, debts or services
cash advantages
instant money in hand
can be used anywhere
no transaction fee
cash disadvantages
can rip
lose it
target for thieves
what is a standing order?
is an instruction a bank account holder gives to their bank to pay a set amount to regular intervals to another account
standing order advantage
easy and quick
free for the payee and payer
what is a contactless payment?
a credit, debit card, key fobs, mobile phones or other devices that can be used to pay for good or services
contactless payment advantage
easy and quick
don’t have to handle cash
see how much your spending on mobile banking
contactless payment disadvantage
easy to overspend
limit on £45
