unit 1.6 - borrowing money Flashcards
APR
Annual percentage rate - total cost of borrowing over one year, including interest charger and any fees
ATM
Automated teller machine , cash machine
bank rate
interest rate that Bank of England uses when it lends money to other banks.
basic bank account
current account that allows people to store money as an electronic balance and make payments. NO debit card , cheque book or overdraft facility on this type of account.
balance transfer
moving the balance (total amount owed) on a card from one card provider to another
Card verification value (CVV)
three numbers on the back of the card, These are a security measure designed to prevent fraudulent use of the card by someone else.
cashback card
type of card that gives back to the card holder a percentage of the value of transactions made with the card, in the form of cash
charge card
credit card that must be paid back in full every month
cheque
a written instruction to the provider to oat a specified amount to a specified person or organisation
consumer credit
this is another term for borrowing, “taking credit” or “buying credit” refers to borrowing.
cost of borrowing
also called ‘cost of credit’. This is the total amount that the borrower will be charged including interest and any additional fees. For personal loans and credit card borrowing, the cost over a 12 month period must be quoted -APR
credit agreement
formal agreement between the provider and a borrower setting out the amount borrowed, interest charged, the arrangements for repayment and any other terms and conditions.
Credit card
card that allows holder to make purchases. Transactions are paid by the card provider, card holder repays the amount owed to the provider either in one payment or instalments. Provider charges interest on cash withdrawals from when it happened and on purchases after a certain period.
credit history
record of money borrowed and repaid by an individual. These records are held by credit reference agencies and providers will check the individuals credit history when a customer applies for a borrowing product.
credit union
mutual organisation (that’s owned by members) that provides a range of financial products to members. members of a credit union must share a common bond, (e.g. work in the same area)
current account
bank or building society account where people can store their money in the form of an electronic balance and withdraw it to make payments.
debit card
card that can be used to withdraw cash, to make face-to-face payments online or over the phone.
direct debit
electronic payment out of an account.
EAR
equivalent annual rate - cost of borrowing using an overdraft
interest
money 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 type of account or sometimes on credit history.
interest
money 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 type of account or sometimes on credit history.
interest rate
the amount that a financial services provider pays to a saver or charges a borrower when it lends money. Expressed as a percentage.
mortgage
a loan taken out to pay for a property, usually over a long term such as 25 years.
overdraft
facility that allows an account holder to withdraw more money than what they have in their account.
payday loan
loan designed to be taken out for very short period, which charges a very high APR.
payment allocation
order in which a card provider uses money paid into an account to pay off the amount outstanding
standing order
electronic payment out of an account. Standing orders are uses to make regular payments of the same amount.
store card
card issued by a retailer that the holder can use to make purchases within that store. Like a credit card, the amount owing is paid off at a later date, and interest is paid on amount owed.
