personal finance Flashcards
what are financial institutions
organisations that offer financial services to individuals and/or businesses.
what are the 9 financial institutions
bank of england
banks
credit union
payday loan
pawnbrokers
pension companies
insurance companies
national savings and investments
building societies
bank of england definition
central bank of uk - responsible for maintaining monetary and financial stability in the country
bank of england advantages
ensures monetary stability
regulated financial system
promotes economic growth
bank of england disadvantages
keeps interest rates high for too long
banks definition
provides various services e.g. accepting deposits, lending money
bank advantages
safekeeping on funds
access to credit
convenient financial services
money protected against fraud or error
bank disadvantages
when u place money in a bank u cannot invest the money
building societies definition
provides banking and mortgage services to its members
building societies advantages
competitive mortgage rates
personalised customer service
opportunity to become a member and have a say in societies operations
building societies disadvantages
limited investment opportunities
inflexible - may have penalties for early withdrawal
credit union’s definition
financial cooperatives that are owned and operated by their members, offer similar services to banks
benefits of credit union
lower interest rates on loans
higher interest rates of savings accounts
personalised customer service
sense of community and member ownership
drawbacks of credit unions
limited branch and ATM services compared to larger banks
may have fewer financial resources available
national savings and investments definition
financial institution in the uk that offers a range of savings and invest,ent products backed by the uk gment
insurance companies
companies that provide insurance policies to individuals or organisations to protect against potential financial loss
national savings and investments benefits
gment backing
secure
competitive interest rates
wide range of saving and investment products to chose from
national savings and investments drawback
may charge penalties if u cash out early on some investment products
rates are variable
often required to give notice on withdrawals
insurance companies advantages
offer a wide range of services and cover to suit the individual
provide protection against unexpected loss or financial expenses
insurance companies drawbacks
profit making organisation - premiums will be charge to ensure shareholders needs are met
premiums are assessed on the degree of risk which may be seen to penalise some individuals or groups in society too harshly
pension companies
companies that offer retirement plans and manage investments for individuals to help them save for their future
pensions companies benefits
experts are employed to make investment decisions
provide a structure to help plan for financial security after retirement
pension companies drawbacks
poor investment decisions made by pension company may result in a disappointing return on investments
money already invested in a pension company cannot be released prior to the dates agreed in the policy
pawnbrokers
businesses that provide short term loans to individuals by accepting personal items as collateral
benefits pawnbrokers
a quick way or acquiring cash needed for a short period of time
interest is not charged
drawbacks pawnbrokers
if the item is not brought back in a specified time period, the pawnbroker will sell it on
the amount given for an asset is often significantly lower than the actual worth
payday loan
a type of short term loan that is typically repaid with high interest rates on the borrowers next payday
payday loan benefits
quick way to acquire cash
useful to meet emergency cash shortages
payday loan drawbacks
only available for relatively small amounts of money
high interest rates
