Topic 2 Unit 2

Question 1

Where is the card security number on a debit card?

Answer 1

It is written on the back where the signature is. This is what is required if you to do online shopping, never a PIN.

Question 2

What is cashback?

Answer 2

Debit cardholders can get cash when they pay for goods in shops that offer ‘cashback’. The amount of cash that they want is added to the total amount of the transaction.

Question 3

What is the maximum cashback amount?

Answer 3

A maximum of £100 can be withdrawn in cash in this way per transaction, though shops may have a lower limit such as £50.

Question 4

What card is cashback services available to?

Answer 4

Debit card only.

Question 5

What is the limit amount on a card?

Answer 5

The maximum you can spend on it. (the money is your current account).

Question 6

Do some ATMS charge for their services?

Answer 6

There is a charge for using a debit card to withdraw money from an ATM that belongs to a bank that is not your own bank. It may be as little as £1 or £1.50 per transaction.

Question 7

Is there a charge for shopping online?

Answer 7

There is also occasionally a small charge when you use your debit card to pay for things online – for example, airline tickets. This might be £3 or £4, or a small percentage of the value of the transaction

Question 8

What are contactless cards also known as?

Answer 8

‘Wave and pay’, or ‘tap and go’, ‘cashless’ and ‘contactless’ cards.

Question 9

What is an advantage and disadvantage to debits cards?

Answer 9

One advantage of a debit card is that it allows you to access the money in your account at any time of day or night.
One disadvantage is that you are limited to spending the amount that you have in your account.

Question 10

What are credit cards?

Answer 10

Credit cards are a type of rolling credit. They allow you to borrow money to buy things and pay it back over a period of your choice.

Question 11

What is an ‘issuer’?

Answer 11

The bank that issues the card.

Question 12

What is the ‘merchant’?

Answer 12

The shop or supplier who accepts the card as payment.

Question 13

What is a ‘merchant acquirer’?

Answer 13

The bank that the merchant uses to process the card payment for them.

Question 14

What is a credit limit?

Answer 14

A maximum amount that you can borrow on the card.

Question 15

What sort of credit fees/charges are there?

Answer 15

• late payment fees (if your monthly payment is late);
• an ‘over the credit limit’ fee (if you spend over your pre-agreed credit limit);
• a returned payment fee (if you set up a direct debit to make the minimum
  monthly payment to your credit card and, on the day that the payment was due
  to be taken, there was not enough money in your current account to do so).

Question 16

How can card holders repay their borrowed amounts?

Answer 16

• Repay the balance completely. If they do this, they will not be charged any interest.
• Repay the minimum balance. A cardholder must make a minimum repayment that is equivalent to more than a single month’s interest. Repay a sum larger than the minimum balance
• If the cardholder does this, they will repay the card balance more quickly than
  by repaying only the minimum balance and so will end up paying less interest.

Question 17

What is the common ‘interest free’ period for credit cards?

Answer 17

It various per company, but the average is between 50 and 59 days.

Question 18

How many contactless cards are there in the UK?

Answer 18

Over 120 million.

Question 19

What is an advantage and disadvantage to credit cards?

Answer 19

One advantage of a credit card is that you can buy something and pay for it later.
One disadvantage is that you have to pay high interest rates if you do not repay your balance in full straight away.

Question 20

What are store-cards?

Answer 20

Some stores issue cards that you can use only in that shop. These may offer you discounts on the items that you buy using the card – especially when you first apply. Store cards work like credit cards, but tend to have higher rates of interest.

Question 21

What are disadvantages and advantages of store-cards?

Answer 21

One advantage of a store card is that you may qualify for discounts in the shop that
issued the card.
One disadvantage is that if you do not repay your whole balance and you choose to leave
some outstanding instead, you will be charged a really high rate of interest on the amount
left outstanding.

Question 22

What are charge cards?

Answer 22

A charge card is used for making payments in a similar way to a credit card, except that you must repay the balance in full when the statement arrives.

Question 23

Who are the main providers of charge cards?

Answer 23

The main providers of charge cards are American Express and Diners’ Club.

Question 24

Do charge cards have limits?

Answer 24

Charge cards have very high limits - some even no limit at all. However, for large payments, you may be phoned to confirm that you will be able to pay this back in full.

Question 25

How do charge card companies make any money?

Answer 25

Charge card companies make their money by charging the retailer instead of the customer.

Question 26

What are the advantages and disadvantages to charge cards?

Answer 26

One advantage is that there is practically no credit limit, meaning expensive loans can be easily accessed.
A disadvantage is that you can only borrow the money for about a month and you’ll have to repay your balance in full when your statement arrives.

Question 27

What are prepaid cards?

Answer 27

Cards in which a balance is already pre-loaded onto the card.

Question 28

What’s another use of a prepaid card?

Answer 28

A gift card (eg amazon voucher).

Question 29

What are the benefits of prepaid cards?

Answer 29

Little identification needed (great availability), help yourself budget or control your spending, there is no debt risk and ease of use whilst abroad.

Question 30

What are cash cards?

Answer 30

Cash cards are plastic cards that account holders can use in branches and ATMs to take cash out of their accounts. Cash cards cannot be used for anything other than getting cash – that is, they cannot be used for buying things in shops.

Question 31

What are the limits of a cash card?

Answer 31

When using a cash card, you are limited to the amount that you have in your current
account plus the amount of any overdraft

Question 32

What are the advantages and disadvantages of cash cards?

Answer 32

One advantage of cash cards is that you can use them to get cash out of an ATM at any time of the day or night.
One disadvantage is that you cannot use a cash card in shops.