Unit 1.4 - everyday payments

Question 1

AER

Answer 1

annual equivalent rate is interest rate 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

ATM

Answer 2

Automated tele machine, also known as cash machine

Question 3

basic bank account

Answer 3

current account that allows people to store money as an electronic balance and make payments by direct debit, standing order, prepaid cash card or by withdrawing cash. (NO DEBIT CARD, CHEQUE BOOK OR OVERDRAFT FACILITY)

Question 4

budget surplus

Answer 4

sum of money available once all essential expenditure in a given period has been made

Question 5

cash card

Answer 5

card used to withdraw cash from atm or branch counters

Question 6

cheque

Answer 6

written instruction to provider to pay specified amount to a specified person.

Question 7

current account

Answer 7

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

Question 7

debit card

Answer 7

can be used to withdraw cash, make face to face transactions, and make payments online or over the phone

Question 7

direct credit

Answer 7

electronic payment into an account

Question 7

direct debit

Answer 7

electronic payment made out of an account

Question 7

HMRC

Answer 7

her majesty’s revenue and customs - organisation that collects taxes on behalf of government

Question 7

interest

Answer 7

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. Each provider decides the rate of interest it will pay or
charge, depending on the type of account and, in some cases, the
credit history of the individual account holder.

Question 8

money laundering

Answer 8

process of making ‘dirty’ money (money gained from illegal activities) ‘clean’ - making it look like it has been acquired legitimately

Question 9

office of fair trading

Answer 9

government department that monitored how businesses compete with each other. Abolised in April 2014 - responsibilities shared between financial conduct authority and competition and markers authority

Question 10

overdraft

Answer 10

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

Question 11

packaged account

Answer 11

current account that offers extra benefits for monthly fee

Question 12

premier account

Answer 12

account that offers additional benefits, for rich customers with income or savings above certain level

Question 13

prepaid cards

Answer 13

card that has to have money credited to it before card holder can use it. Once initial money is gone, can be topped up again

Question 14

standing order

Answer 14

electronic payment out of an account. are used to make regular payments of the same amount

Question 15

statement

Answer 15

record of transactions on an account, issued at regular intervals. Indicates whether a debit or credit to the account was made.

Question 16

transaction

Answer 16

buying or selling something

Question 17

youth account

Answer 17

current account designed for under 18. No overdraft facility.