Topic 6 Flashcards
ATM
Automated Teller machine, also known as a cash machine
Bank rate
The interest rate that the Bank of England uses when it lends money to other banks. Financial services providers take account of the bank rate when setting their own interest rates.
Basic bank account
A current account that allows people to store and make payments from an electronic balance but it does not include a debit card, chequebook or overdraft.
Balance transfer
Moving the balance on a card from one card provider to another
Card Verification Value CVV
Three numbers on the back of a credit or debit card, a security measure designed to prevent fraudulent use of the card by someone other than a cardholder
Cash back card
A type of card that gives back a percentage of the value of transactions made in cash back to the cardholder
Charge card
A credit card that must be repaid in full every month
Cheque
A written instruction to the provider to pay a specified amount to a specified person or organisation.
Consumer credit
Another term used for borrowing. It is important to understand that taking credit and buying on credit refers to borrowing. However credit to a bank account refers to paying money in.
Cost of borrowing
Also known as cost of credit. This is the real amount that the borrower will be charged including interest and any fees. For personal loans and credit card borrowing, the cost over a 12 month period must be quoted, the APR.
Credit agreement
The formal agreement between a provider and a borrower setting out the amount borrowed, interest charged, and arrangements for repayment and other terms and conditions.
Credit card
A card that allows face to face, online or phone purchases. Transactions are paid for by the card provider rather than taken out of the holder’s own account. The card holder repays the provider in one sum or instalments. The provider also may charge interest
Credit history
The record of money borrowed and repaid for by an individual. These records are held by credit reference agencies and providers will check the individual’s credit history when a prospective customer applies for a borrowing product.
Credit union
A mutual organisation that is owned by its members and provides a range of financial products to members, e.g. Savings accounts and personal loans. Members must share a common bond, like working for an employer or working in the same area.
Current account
Bank or building society account where people can store their money in the form of electronic balances and withdraw it to make payments
Debit card
A card that can be used to withdraw cash, make face to face transactions and pay online or over the phone.
Store card
A card issued by a retailer that the holder can use to make purchases within that store or group of stores. As with a credit card, the amount owing is paid off at a later date, either in one payment or instalments, with interest.
APR
Annual percentage rate - the total cost of borrowing over one year, including interest rate and fees
Direct credit
Electronic payment into an account such as a salary or benefit
Direct debit
Electronic payment out of an account. The amount and frequency can vary.
EAR
Equivilant Annual Rate - the cost of borrowing using an overdraft. The EAR includes only the interest rate. Other fees are listed separately.
Interest
Money either paid to an account holder by the provider or charged to the account holder by a provider. Paid on savings accounts and some current accounts and charged on borrowing. Interest rate depends on provider, account type and the credit history of the individual account holder.
Mortgage
A long term loan to pay for a property, usually over a long time e.g. 25 years
Interest rate
The amount, expressed as a percentage, that a financial services provider charges a borrower and pays to a saver.
