topic 4

Question 1

AER

Answer 1

annual equivalent rate is the interest that will be earned on the money in one year and takes into account how often the provider pays the interest, the effect of compounding the interest and any fees and charges

Question 2

ATM

Answer 2

automated teller machine

Question 3

basic bank account

Answer 3

a current account that allows people to store their money as an electronic balance and make payments by direct debit, standing order, prepaid cash card or by withdrawing cash. There is no debit card, cheque book or overdraft facility on this type of account

Question 4

budget surplus

Answer 4

a sum of money available once all the essential expenditure in a given period has been made

Question 5

cash card

Answer 5

a card used to withdraw cash from ATMs or branch counters

Question 6

cheque

Answer 6

a written instruction to the provider to pay a specified amount to a specified person or organisation

Question 7

current account

Answer 7

a bank or building society account where people can store their money in the form of an electronic balance and withdraw it to make payments

Question 8

debit card

Answer 8

a card that can be used to withdraw cash, to make face-to-face transactions in, and to make payments online or over the phone

Question 9

direct credit

Answer 9

an electronic payment into an account

Question 10

direct debit

Answer 10

an electronic payment out of an account

Question 11

HMRC

Answer 11

her majesty’s revenue and customs - the organisation that collects taxes on behalf of the government

Question 12

interest

Answer 12

money either paid to an account holder by the provider or charged to the account holder by the provider. Interest is paid on savings accounts and some current accounts and charged on borrowing. Each provider decides the rate of interest it will pay or charge, depending on the type of account and, in some cases, the credit history of the individual account holder

Question 13

money laundering

Answer 13

the process of making “dirty” money “clean”

Question 14

office of fair trading

Answer 14

the government department that monitored how businesses compete with each other. It was abolished in april 2014 and its responsibilities shared between the financial conduct authority and the competition and markets authority

Question 15

overdraft

Answer 15

a facility that allows an account holder to withdraw more money than they actually have in their account

Question 16

packaged account

Answer 16

a current account that offers extra benefits for which the account holder pays a monthly fee

Question 17

premier account

Answer 17

a current account that offers additional benefits for wealthy customers with an income or savings above a certain level

Question 18

prepaid cards

Answer 18

a card that has to have money credited to it before the card holder can use it to pay for goods and can be topped up once the initial sum of money runs out

Question 19

standing order

Answer 19

an electronic payment out of an account used to make regular payments of the same amount

Question 20

statement

Answer 20

a record of the transactions on an account, issued at regular intervals. The statement indicates whether a debit or credit to the account was made by cheque, withdrawal from an ATM, direct debit, etc

Question 21

student account

Answer 21

a current account designed for students in higher education that charges low interest or no interest on overdrafts, and offers other benefits

Question 22

transaction

Answer 22

buying or selling something

Question 23

youth account

Answer 23

a current account designed for people under 18, no overdraft facility is provided as banks do not usually allow under-18s to borrow