Topic 6 key terms(borrowing products) Flashcards
APR
definition:annual percentage rate,the total cost of borrowing over one year,includes interest charge on any fees
ATM
definition:cash machine
bank rate
definition:interest rate that the bank of England uses when it lends money to other banks
balance transfer
definition:moving the balance on a card from one card provider to another
basic bank account
definition: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
card verification value (CVV)
definition:three numbers on the back of a credit or debit card
cash back card
definition:a type of card that gives back to the cardholder a percentage of the value of transactions made with the card in the form of cash
charge card
definition:credit card that must be repaid in full every month
cheque
definition:a written instruction to the provider to pay a specified amount to a specified person or organisation
consumer credit
definition: another term used for borrowing,’taking credit’ or “buying on credit’ refers to borrowing,credit into a bank account means paying
money in
cost of borrowing
definition: This is the total amount that the borrower will be charged including interest and any fees,personal loans and credit card borrowing the cost over a 12 month period must be quoted
credit agreement
definition: formal agreement between a provider and a borrower setting out the amount borrowed,interest charged,arrangements for repayment and any other conditions
credit card 
definition: card that allows the holder to make purchases face to face,online or over the phone, and to withdraw cash from an ATM the transactions are paid by the card provider(bank), card holder repays the amount owed to the provider either in one payment or in instalments
credit history
definition: record of money borrowed and repaid by an individual,these
records are held by credit reference agencies and providers will
check the individual’s credit history when customer applies to borrow
credit union
definition:a mutual organisation that provides a range of financial products to members,members of credit union must share a common bond
current account
definition: bank or building society account where people can store their
money in the form of an electronic balance and withdraw to make payments
debit card
definition: card that can be used to withdraw cash,make face-to-face
transactions in shops and to make payments online
direct credit
definition: An electronic payment into an account like a salary or benefits
direct debits
definition: electronic payment out of an account,amount and frequency of a direct debit payment can vary
EAR
definition:equivalent annual rate-cost if borrowing using an overdraft
interest
definition: 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
interest rate
definition: The amount,expressed as a percentage,that a financial services
provider pays to a saver,or charges a borrower when it lends money
mortgage
definition: loan taken out to pay for a property usually over a long term
overdraft
definition: facility that allows an account holder to withdraw more money than they actually have in their account
payday loan
definition: A loan designed to be taken out for only a very short period charges a very high APR
payment allocation
definition: The order in which a card provider uses money paid into an account to pay off the amount outstanding
personal loan
definition: A product that allows someone to borrow a fixed amount over a fixed period at a fixed rate of interest
standing order
definition: electronic payment out of an account,Standing orders are used to make regular payments of the same amount
store card
definition: A card issued by a retailer that the holder can use to make purchases within that store or group of stores,like a credit card, the amount owing is paid off at a later date
