Planning Expenditure & Payment Methods Flashcards
What are 4 common principles when planning expenditure?
1. Remaining __________.
2. Avoid getting into ________.
3. ____________ income and savings.
4. Providing _____________ for emergencies.
- solvent
- debt
- Generate
- insurance
What is cash?
_______________________ (coins or notes) used to exchange goods, debts or services.
Physical currency
What are the advantages of cash?
1.
2.
- Easier to budget your money.
- No debt.
What are the disadvantages of cash?
1. Easily ____________.
2. On one occasion, you may not have enough cash to cover an ______________________.
stolen
emergency cost
What is a cheque?
An ___________ to a bank to pay a stated sum from the ____________________.
order
drawer’s account
What are the advantages of cheques?
1.
2.
- If a cheque is lost, no money will be lost.
- Only the named recipient can receive the money.
What are the disadvantages of cheques?
1.
2.
3.
- It takes 3 working days to transfer money.
- Not many shops accept them.
- It can easily lead to fraudulent payment transaction.
What is electronic transfer?
When payment is transferred directly and digitally from one bank account to another.
What are 2 advantages of electronic transfer:
1.
2.
- It is almost instant.
- Provides a record of payment.
What is a disadvantage of electronic transfer?
There is a risk of loss if the transfer is set up incorrectly.
What are the 6 different types of cards:
1.
2.
3.
4.
5.
6.
- Debit card.
- Credit card.
- Pre-paid card.
- Contactless card.
- Charge card.
- Store card.
What are the advantages of a debit card?
1.
2.
- Can withdraw cash from various places.
- Secure.
What are the disadvantages of a debit card?
1. Need to ___________________ the bank balance.
2. Overspending has __________________.
- monitor overspending
- costly effects
What are the advantages of a credit card?
1.
2.
- Allows you to defer and spread payments.
- Widely accepted.
What are the disadvantages of a credit card?
1.
2.
- Interest charged on outstanding balance.
- Can encourage overspending.
The difference between a debit and credit card is that a debit card does not use borrowed money.
A credit card is borrowed money from a credit card provider.
The credit card provider will charge you interest called an _______; ____________________.
APR
annual percentage rate
A prepaid card is a type of card ____________ with money, but not linked to a _______________ (unlike a debit card).
preloaded
bank account
What are 2 advantages of a prepaid card:
1.
2.
- They are available to anyone.
- No risk of overdraft.
What is a disadvantage of a prepaid card:
May involve a fee to purchase the card in the first place.
A contactless card is a type of card with an ___________________ that only needs to be held close to a terminal to transfer its data; no ________________ needs to be entered.
It is secure, but only allowed for small transactions (no outlet shopping).
embedded chip
PIN number
A charge card is a type of card that works like credit cards, except _________________________________________.
balance must be paid in full every month
What are 2 advantages of a charge card?
1.
2.
- Has a short period of credit.
- High spending limit.
What is a disadvantage of a charge card:
Failure to repay results in _________________________, (usually much higher than a standard credit card).
very high late payment fees
Store card is a ______________ issued for a specific store.
credit card
What is an advantage of a store card:
May offer ________________ and _____________ as a bonus.
loyalty schemes
discounts
What are 2 disadvantages of a store card:
1.
2.
- Only accepted in a specific store.
- Rates of interest are often very high.
Direct debit is an ________________ made with a bank to allow a ______________ to withdraw a _______________ amount of money from an account on a ___________.
This is to pay for goods or services received: e.g. pay a gas bill
agreement
third party
flexible
set day
What is an advantage of direct debit?
Ensures regular payments are not missed.
What is a disadvantage of direct debit?
The payment the third company part demands may _______ sometimes, which makes _______________ difficult.
vary
budgeting
What is a standing order?
An ________________ made with a bank to allow a ______________ to withdraw a _________ amount of money from an account on a ___________.
agreement
third party
fixed
set day
Direct Debit: Controlled by the _____________________; so there is a _________________________, which guarantees a __________ in case of errors.
Standing Order: Controlled by the ___________; so there is _______________________.
third party company
Direct Debit Guarantee
refund
payer
full control over payment details
What are 2 advantages of mobile banking?
1.
2.
- Easy to access.
- More secure than internet banking.
What are 2 disadvantages of mobile banking?
1. Not available on ______________.
2. Regular use of mobile banking can lead to _______________ given by the bank.
- all phones
- extra charges
Banking Automated Clearing Service (BACS) is a type of payment allowing to transfer money ____________ and ____________ between __________________.
securely
quickly
bank accounts
Clearing House Automated Payment System (CHAPS) is a system allowing the transfer of payment to go _________________________.
straight to another account
CHAPS typically take ______________________ to process.
BACS typically take ____________________ to process.
several business hours
three working days
The CHAPS transfer system is for: ___________________________.
While BACS is better suited for: _________________________________.
larger, one-off payments
lower-value, regular transactions
What does FPS stand for?
Faster Payment Service.
What is FPS’s main advantage that makes it easy to transfer money between friends:
The transfer is instant.
What are the 2 advantages of BACS, CHAPS, and FPS?
It is:
1.
2.
- Quick.
- Secure.
What is 1 disadvantage of BACS, CHAPS, and FPS?
May incur an ____________________ per _____________, so care must be taken that all details are correct.
additional charge
transaction
