Unit 3 - 45-60 Flashcards
What are the functions of money?
Unit of account, means of exchange, store of value, legal tender.
What are the roles of money?
Personal attitudes, life stages, culture, life events, external influences, interest rates
Benefits of planning
Good credit rating, earn interest, available to pay for unexpected expenses.
Risks of not planning
Debt, poor credit rating
Benefit/negative of Cash
Accepted in most places/can be stolen, cannot be used for online purchases
Difference between debit and credit card
Debit=payment taken directly from cardholders bank account.
Credit=paid for directly by card issuer
What is direct debit?
An instruction to a bank authorising a third party to collect varying amounts of money from persons bank account.
What is Standing order
Instruction to bank from account holder to make regular set payments to person or organisation.
Difference between BACS and CHAPS
BACS=no fee, takes 3 days to transfer payments.
CHAPS=fee charged, guaranteed same-day transfer
What are the 4 types of current account?
Standard, packaged premium, student, basic
Overdraft
Short-term loan, arrange with bank to borrow money up to an agreed amount, high interest on money borrowed
Personal loan
Used to buy expensive items, pay back in monthly instalments at fixed interest rate.
Hire purchase
Used to buy a car, put down deposit and pay monthly instalments, during payment period you hire the car and own it once all instalments are paid.
Mortgage
Loan taken out to buy a property, monthly instalments spread cost over long period
Payday loan
Short-term loan usually for small amounts, fee is charged, expensive method of borrowing
What are the 2 types of ISA?
Cash ISA=savings account where interest is paid.
Stocks and shares=more risky, funds invested in shares or bonds, potential for either loss or gain
Premium bonds
No interest payed, given chance to win a tax-free cash prize every month
Bonds and gilts
Pay investors regular interest over a set period of time, value can fall
Shares
Give investors part ownership of a company, shareholders receive payments based on the performance of the business
Pensions
Long-term savings schemes designed to help you save for retirement
Name the types of insurance
Car, home and contents, life insurance+assurance, travel, pet, health
Financial institutions
Banks, building societies, credit unions, insurance companies, pawnbrokers, pension companies
Types of customer communication
Bank branch, telephone, online, postal, mobile
Consumer protection
FCA(financial conduct authority), FOS(financial ombudsman service)
FSCS(financial services compensation scheme)
