week 4 : everyday banking

Question 1

AER

Answer 1

Annual equivalent rate is the interest that will be earned on the money
in one year and takes into account how often the provider pays the interest (for example, monthly or annually), the effect of compounding
the interest and any fees and charges.

Question 2

atm

Answer 2

automated teller machine - also known as cash machine

Question 3

basic bank account

Answer 3

A current account that allows people to store their money as an
electronic balance and make payments by direct debit, standing order,
prepaid cash card or by withdrawing cash. There is no debit card,
cheque book or overdraft facility on this type of account.

Question 4

budget surplus

Answer 4

A sum of money available once all the essential expenditure in a given
period, eg a month, has been made

Question 5

cash card

Answer 5

a card used to withdraw cash from ATMs or branch counters

Question 6

cheque

Answer 6

A written instruction to the provider (eg the bank or building society)
to pay a specified amount to a specified person or organisation. (The
law relating to cheques is quite complex so this is a simplified
explanation for the purpose of these study materials.)

Question 7

current account

Answer 7

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

Question 8

debit card

Answer 8

A card that can be used to withdraw cash, to make face-to-face
transactions in, for example, shops, and to make payments online or
over the phone.

Question 9

direct credit

Answer 9

An electronic payment into an account, for example a salary or benefit
payment

Question 10

direct debit

Answer 10

An electronic payment out of an account. The amount and frequency
of a direct debit payment can vary.

Question 11

HMRC

Answer 11

Her Majesty’s Revenue and Customs – the organisation that collects
taxes on behalf of the government.

Question 12

interest

Answer 12

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, eg an
overdraft. 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 13

money laundering

Answer 13

The process of making ‘dirty’ money (money gained from criminal
activities) ‘clean’ – in other words making it look as though it has been
acquired legitimately

Question 14

office of fair trading

Answer 14

The government department that monitored how businesses compete
with each other. It was abolished in April 2014 and its responsibilities
shared between the Financial Conduct Authority and a new
organisation, the Competition and Markets Authority

Question 15

overdraft

Answer 15

A facility that allows an account holder to withdraw more money than
they actually have in their account.

Question 16

packaged account

Answer 16

a current account that offers extra benefits such as travel insurance,
for which the account holder pays a monthly fee.

Question 17

premier account

Answer 17

t A current account that offers additional benefits, such as a personal
banker, for wealthy customers with an income or savings above a
certain level.

Question 18

prepaid cards

Answer 18

A card that has to have money credited to it before the card holder can
use it to pay for goods. Once the initial sum of money on the card runs
out, it can be topped up again. Some prepaid cards can be loaded with
foreign currency and used abroad.

Question 19

standing order

Answer 19

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

Question 20

statement

Answer 20

A record of the transactions on an account, issued at regular intervals
such as monthly or quarterly. The statement indicates whether a debit
or credit to the account was made by cheque, withdrawal from an ATM,
direct debit, etc

Question 21

student account

Answer 21

A current account designed for students in higher education that
charges low interest or no interest on overdrafts and offers other
benefits such as low cost contents or travel insurance.

Question 22

transaction

Answer 22

buying or selling something

Question 23

youth account

Answer 23

A current account designed for people under 18; no overdraft facility is
provided as banks do not usually allow under-18s to borrow