Topic 4

Question 1

ATM

Answer 1

Automated Teller Machine

Question 2

Basic bank account

Answer 2

A current account that allows people to store their money as an electronic balance and make payments with direct debit, standing order or prepaid cash card. No debit card, chequebook or overdraft.

Question 3

Budget Surplus

Answer 3

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

Question 4

Cheque

Answer 4

A written instruction to a provider to pay a specified amount to a specified person or organisation.

Question 5

Current account

Answer 5

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

Question 6

Debit card

Answer 6

A card that can be used to withdraw cash, make face to face payments e.g. At a shop, or pay over the Internet or phone.

Question 7

AER

Answer 7

Annual equivalent rate - the amount of interest earned on money in one year, taking into account how often the provider pays interest

Question 8

HMRC

Answer 8

Her majesty’s revenue and customs - the organisation that collects tax on behalf of the government.

Question 9

Interest

Answer 9

Money paid to an account holder by a provider or charged to the account holder by the provider. Interest is paid on savings and some current accounts and is charged on borrowing. Each provider decides the rate it will pay depending on the type of account.

Question 10

Money laundering

Answer 10

The process of making ‘dirty’ money (acquired through criminal activities) ‘clean’ (looking like it has been acquired legitimately.)

Question 11

Office of fair trading

Answer 11

Monitored how businesses compete with each other. Abolished in 2014 and replaced with Financial Conduct Authority and Competition and Markets Authority.

Question 12

Overdraft

Answer 12

A facility that allows an account holder to withdraw more money than they have in their account.

Question 13

Packaged account

Answer 13

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

Question 14

Direct credit

Answer 14

An electronic payment into an account, such as a salary or benefit payment.

Question 15

Direct debit

Answer 15

An electronic payment out of an account. The amount and frequency can vary.

Question 16

Prepaid cards

Answer 16

A card that has to have money credited to it before a card holder can use it to pay for goods. Once the initial sum runs out it can be topped up again. Can also be loaded with foreign currency and used abroad.

Question 17

Standing order

Answer 17

Regular electronic payments out of an account of the same amount.

Question 18

Statement

Answer 18

A record of transactions on an account issued at regular intervals such as monthly or quarterly. Statement indicated whether a debit or credit to the account was made by cheque, ATM withdrawal or direct debit etc.

Question 19

Student account

Answer 19

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

Question 20

Transaction

Answer 20

Buying or selling something

Question 21

Youth account

Answer 21

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

Question 22

Premier account

Answer 22

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