Topic 4 - Everyday Banking

Question 1

What makes a good current account?

Answer 1

It has the ability to make payments online
Easy to use as long as account is in credit

Question 2

Where can you buy a current account?

Answer 2

From banks and building society’s
Sometimes available from retailers who offer packaged accounts
- e.g. m&s bank, wholly owned subsidiary of HSBC

Question 3

What do all current accounts do?

Answer 3

-offer regular statements online or on paper to enable people to monitor their transactions

Question 4

What are the 6 types of current accounts?

Answer 4

• basic bank accounts
• packaged accounts
• premium accounts
• standard current accounts
• student accounts
• youth accounts

Question 5

What is a basic bank account?

Answer 5

• suits people who wish to avoid borrowing, living on benefits or low income who havnt had a current account before
• can be opporeted using cash cards or prepaid cards

Question 6

What is a youth accounts?

Answer 6

Available for people aged under 18 years old
Don’t offer overdraft facilities

Question 7

What do youth accounts offer for 16-19 year olds? ( 8 things)

Answer 7

For 16 to 19 year olds:
- cash cards
- cheque book
- debit cards
- direct debits
- mobile banking
- online banking
- standing order
- text alerts

Question 8

What do youth accounts offer for 11-15 year olds?

Answer 8

Cash cards or debit cards

Question 9

What is a standard current account?

Answer 9

Full range of current account facilities offered unless overdraft facility is used or services that incur a charge are requested

Question 10

What is a student and graduate account?

Answer 10

Variation of a standard current account.
Tailore to the needs of students:
- low or no interest overdraft facility
- banks aim to intice students to make an account with them thus provide up to 3% interest

Question 11

What is interest paid on credit?

Answer 11

When current accounts pay interest on credit balances.
- an example is interest paid at 2% fixed for a year on £1500 that then decreases to 0.25% on the next year

Question 12

What 4 conditions can be applied to current accounts that pay interest on credit?

Answer 12

• paying in a minimum monthly amount
• keeping the account in credit
• banking online or by telephone
• interest is on aid on balances between certain minimum and maximum amounts
  May be fees for holding the account

Question 13

What is a joint account?

Answer 13

Acccounts held by two or more people.
- suit people who share finances or those who share rented homes.

Question 14

When would a joint account not be suitable?

Answer 14

For people who have different priorities or attitudes to managing money.
It’s important to note that if a joint account becomes overgrown then all account holders credit becomes affected

Question 15

What is a packaged account?

Answer 15

An account that offers account holders extra benefits for a monthly fee.

Question 16

What could a packaged account include? ( 2 examples)

Answer 16

Mobile phone or travel insurance,
car breakdown cover,
discounts on stores
and subscriptions for media services.

Question 17

What could a packaged account fee be?

Answer 17

£2 to £20

Question 18

When would a packaged account be suitable?

Answer 18

If the costs of the benefits they will use are greater than annual account fee.

Question 19

What is a premier account?

Answer 19

An account designed for wealthy customers and offer a range of additional services such as a personal banker to help account holders manage their finances and banking product products

Question 20

What is required when opening an account?

Answer 20

Proof of identity and address

Question 21

Why are there requirements when opening an account, and consequences for not following them?

Answer 21

• To prevent money laundering, set out in the money laundering regulations 2007.
• if not followed face heavy fines from the financial conduct authority

Question 22

What is money laundering?

Answer 22

The term used to describe the ways in which criminals can use accounts to hide the source of their funds for then make payments in supply of their activities.

Question 23

Why is it important that account holders monitor their transactions?

Answer 23

To ensure they have sufficient money to pay transactions that are due
That they are keeping to their budget
Mistakes havnt born made

Question 24

Can you switch and close accounts?

Answer 24

Yes. You can do so at any time at no cost