Section A Flashcards
What is money?
A method of exchange, typically in the form of bank notes and coins
What are the functions of money?
Unit of account, means of exchange, store of value, legal tender.
How do your personal attitudes to money effect its role?
It’s risk, reward,borrowing, and savings.
What is expenditure?
Money paid out
Name 3 common principles when planning personal finance
Avoid legal action, avoid bankruptcy, counter the effects of inflation.
Why would you plan expenditure?
Avoid getting into debt, control costs, avoid legal action or repossession, remain solvent, good credit rating, avoid bankruptcy.
What is inflation?
Inflation is a decrease in the purchasing power of currency due to a rise in prices across the economy.
Explain the financial needs and implications of someone who is middle aged
Needs - support family, improve lifestyle, and save for future
Implications - paying a mortgage, paying into pensions, high income and high expenses.
List ways you can pay for goods or services.
Mobile banking, store cards, charge cards, contactless cards, direct debit,
Electronic transfer, credit card.
What is cash?
Physical notes and coins in a variety of amounts
What is a debit card?
Payment card that deducts money directly from a customers current account to pay for a purchase.
What is a cheque?
A written order to a bank to pay a stated amount from an individuals account to another.
What is electronic transfer?
Payment being electronically from one bank account to another without any cash. Usually used to pay an employees wages.
What is a standing order?
A standing order is a way of setting up a regular, fixed payment from your bank account. You can set a payment to be taken at a certain frequency and for set amount of time.
What is a pre-paid card?
A plastic alternative to carrying money around and are often called everyday cards. You can top them up when they run out.
What is a contactless card?
Allows money to be transferred by touching the card on a contactless terminal.
What is a charge card?
Are like credit cards in that you buy something now and pay for it later, but the big difference is that you have to pay it off in full every month.
What is a store card?
Issued by retail outlets so that customers can purchase their products on credit.
What is mobile banking?
Carrying out financial transactions using a mobile device or tablet.
What is a BACS ( bankers automated clearing service)
Electronic system to make payments directly from one bank account to another they’re mainly used for direct debits and direct credits from organisations. The payments take 3 working days to clear.
What is (CHAPS) clearing house automated system?
These are payments to accounts that are guaranteed to arrive on the day you make them, as long as you set up the payment in the branch before a certain time
What is a current account?
A current account is a type of banking account that keeps your money secure and helps you manage your finances.
Common features of current accounts?
Paying money in wages
Paying money out
Overdraft
Interest paid on positive balances
Interest charged on negative balances
Additional extras
What are the different types of current accounts?
Standard, basic, premium, student
What are the different types of borrowing?
Overdraft, personal loans, hire purchase, mortgages, credit cards, payday loans
What are the different ways you can save and invest?
Individual savings accounts, premium bonds, guilts, shares, pensions.
What are guilts?
Government bonds in the U.K, India, and other commonwealth countries.
What is insurance?
Insurance is a type of protection
Types of insurance?
Car, life, pet, travel, health, and home.
What does annual premium mean?
The amount of money an individual or business pays for insurance.
What does excess mean when it comes to insurance?
A pre-agreed amount of money that you need to pay to insurance provider in the event of a claim
What are two advantages of using a credit card?
Short term money coverage, loyalty schemes.
What are the advantages and disadvantages of cash?
Advantages- Easy to budget, widely accepted.
Disadvantages- Easy to steal, not good for large purchases.
What are the advantages and disadvantages of a debit card?
Advantages- secure, can be used online.
Disadvantages- may have minimum spend limits, easy to overspend.
What are the advantages and disadvantages of a credit card?
Advantages- you can get loyalty schemes, period of interest free credit.
Disadvantages- Interest charges if not paid off, fees on cash withdrawn.
What are the advantages and disadvantages of electronic transfers?
Advantages- fast method of payment, free.
Disadvantages- can’t do in person payments, could transfer to the wrong person.
What are some advantages and disadvantages of cheques?
Advantages- great for large transfers, safe.
Disadvantages- cheques may bounce, time delay.
What are the advantages and disadvantages of a standing order?
Advantages- easy for budgeting, same amount paid each time.
Disadvantages- payments will be taken no matter your balance, payments won’t stop until cancelled.
What are the advantages and disadvantages of a pre-paid card?
Advantages- avoids overspending, great for capping spending.
Disadvantages- may cost money to set up, no protection if lost.
What are the advantages and disadvantages of contactless cards?
Advantages- very popular, quick.
Disadvantages- limited amount of daily transactions, can only be used for small payments.
What are the advantages and disadvantages of charge cards?
Advantages- no need to carry cash, extra benefits.
Disadvantages- full payment needed at the end of the month, annual fixed fee.
What are the advantages and disadvantages of a store card?
Advantages- short period of interest free credit, special offers.
Disadvantages- can only be used in specific stores, interest is charged on balances.
What are the advantages and disadvantages of BACS?
Advantages- guaranteed instant payments within two hours, no additional costs.
Disadvantages- limited amount in a single transaction, not offered by all banks.
What are the advantages and disadvantages of CHAPS?
Advantages- no limit on the amount in a single transaction, Same day transfer.
Disadvantages- fixed charge for the transaction.
What are the advantages and disadvantages of mobile banking?
Advantages- convenient, secure.
Disadvantages- Limited features compared to internet.
What is unit of account?
A way to put a monetary value on goods and services
What is means of exchange?
The use of money to trade goods and services
What is store of value?
A way to use money in the future as it keeps its value
What is the meaning of legal tender?
A legally recognised form of tender
What does solvent mean?
The ability to meet day to day expenditure and repay debts
