Unit One, Topic 4

Question 1

What is the most common type of bank account?

Answer 1

A current account.

Question 2

What two different numbers does a current account have?

Answer 2

A sort code - a six digit number such as 12-34-56, and an account number, an eight digit number unique to an account.

Question 3

What facilities does a current account have?

Answer 3

• Bank statements, lists of recent transactions given by the bank.
• Standing orders, payments you can set up, usually monthly, to someone.
• `Direct debits, instructions given to your bank to allow certain companies to take money from your account to pay bills.
• A cheque book.
• A debit card
• An overdraft, which allows you to spend more than what you own.

Question 4

What is the difference between an authorised and an unauthorised overdraft?

Answer 4

An authorised overdraft is one you ask permission for, and an unauthorised one the opposite.

Question 5

What is a packaged account?

Answer 5

Offers extra benefits in return for a monthly fee.

Question 6

What are the benefits of a packaged account?

Answer 6

A range of insurance products.
Protection against the consequences of identity theft.
Preferential savings and loan rates.
Access to VIP lounges at various airports.
Return lost key schemes.
Will writing.
Music downloads.

Question 7

What is a savings account?

Answer 7

Savings accounts are a spare place to put money that you don’t plan to use every day.

Question 8

What is an instant access account?

Answer 8

Permits users permit users to take money out at a branch or by transfer to a current account. Money is available whenever you want it.

Question 9

What is a notice account?

Answer 9

You give the bank a notice of seven days to a month - when you want to take money you must thus ask permission. Interest rates are higher, but you will be charged a penalty if money is withdrawn early.

Question 10

What is a regular savers account?

Answer 10

They encourage you to place money in a savings account on a regular basis.

Question 11

What is an individual savings account?

Answer 11

A tax free savings account, with limits on the amount you can save, due to the factor of taxation. You can only have one ISA per year.

Question 12

What is a child trust fund?

Answer 12

A long term tax-free savings account for children, which cannot be accessed until you’re eighteen.

Question 13

What is a junior ISA?

Answer 13

A tax-free savings account for children.

Question 14

What are interest rates?

Answer 14

Interest is money charged and reinvested by the bank, ultimately (in a successful economy), returning profits.

Question 15

What does AER stand for?

Answer 15

It stands for Annual Equivalent Rate.

Question 16

What is a loan?

Answer 16

Loans are large portions of money, repaid back in the long term. Loans can often be seen as investments.

Question 17

What are the two types of loans?

Answer 17

There are personal loans and mortgages, the purpose of which is to permit investments.

Question 18

What are personal loans?

Answer 18

Loans made for a specific purpose: negotiations are undertaken with regard to the given amount, and the scale of return payments.

Question 19

What is a mortgage?

Answer 19

A mortgage is the largest loan available to the public, usually granted for the purchase of housing or other large assets.

Question 20

What is a repayment mortgage?

Answer 20

A normal mortgage.

Question 21

What is Loan to Value?

Answer 21

Loan to Value is a precaution taken by lenders, whereby they refuse to grant more than a certain percentage of a property’s value, relative to a deposit.

Question 22

What are the items on a paying in slip, and what do they mean?

Answer 22

-A stub, also known as a counterfoil, showing the quantity of money given.