Unit 3 A2

Question 1

Advantages of cash

Answer 1

Confidence
Widely accepted
Small denominations
Easy to control expenditure

Question 2

Disadvantages of cash

Answer 2

Risk of loss or theft
Physical transactions only
Inappropriate for large items of expenditure

Question 3

Debit card

Answer 3

Allows you to make purchases by card witht he money being taken directly from a current account.
Used to withdraw cash.

Question 4

Advantages of debit cards

Answer 4

Secure
Widely accepted
Can withdraw cash from various places

Question 5

Disadvantages of debit cards

Answer 5

Need to monitor spending and bank balance
If overspend can be costly

Question 6

Credit card

Answer 6

Make purchases on credit i.e. buy now pay later
Repayments are made following the issue of a statement with a minimum amount

Question 7

Advantages of credit cards

Answer 7

Allows you to defer and spread payment
Widely accepted
Used online or in store

Question 8

Disadvantages of credit cards

Answer 8

Interest is charge on the outstanding balance
Can encourage over spending

Question 9

Cheque

Answer 9

A paper transaction giving a bank permission to transfer payment from your account to another account

Question 10

Advantages of Cheque

Answer 10

Secure method of payment
Widely accepted
Appropriate for postal transaction

Question 11

Disadvantages of Cheque

Answer 11

May be charged for each cheque processed
Costly if cheque is not honoured due to insufficient funds.

Question 12

Electronic transfer

Answer 12

Online transfer of money from one account to another

Question 13

Advantages of electronic transfer

Answer 13

Quick method of payment
Transfer is almost instant
Can be done remotely e.g by mobile app

Question 14

Disadvantages of electronic transfer

Answer 14

Need to be carefully set up to ensure the transfer goes to the right place

Question 15

Direct debit

Answer 15

Permission given to the bank to make regular payments to a third party upon request

Question 16

Advantages of direct debit

Answer 16

Ensures regular payments are not missed

Question 17

Disadvantages of direct debit

Answer 17

Amount taken will vary making budgeting difficult
Need to be re-set up if banks details change
taken automatically (may miss an opportunity to cancel it)

Question 18

Standing order