TOPIC 4

Question 1

AER

Answer 1

Annual equivalent rate - 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

Basic bank account

Answer 2

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 3

Budget surplus

Answer 3

A sum of money available once all the essential expenditure in a
given period, e.g a month, has been made.

Question 4

Current account

Answer 4

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 5

HMRC

Answer 5

Her Majesty’s Revenue and Customs – the organisation that collects taxes on behalf of the government.

Question 6

Office of fair trading

Answer 6

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 7

Packaged account

Answer 7

A current account that offers extra benefits such as travel insurance, for which the account holder pays a monthly fee.

Question 8

Premier account

Answer 8

A current account that offers additional benefits, such as a personal banker, for wealthy customers with an income or savings above a certain level.

Question 9

Student account

Answer 9

A current account designed for students in higher education that charges low interest or no interest on overdrafts, and offers other benefits such as low-cost contents or travel insurance.

Question 10

Youth account

Answer 10

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