A3- Current Accounts

Question 1

WHAT IS A STANDARD ACCOUNT?

Adv & Disadv

Answer 1

The most common account for individuals with OK credit rating.
Can set direct debits and standing orders.
Advantages:
No charges on credit balances. Offers a wide range of facilities. Convenient for receiving regular payments.
Disadvantages:
Potentially high charges on use or overdraft facility. Standard features only i.e. no additional perks.

Question 2

WHAT IS PACKAGED/PREMIUM ACCOUNT?

Adv & Disadv

Answer 2

Offers the same facilities as a standard account, but bundled with an additional “package of services”.
E.g. free home or mobile phone insurance, breakdown cover (car), cash back.
Advantages:
No charges on credit balances. Offers the holder additional perks.
Disadvantages:
Additional monthly charge is applied. The packages offered may not meet the account holder’s needs.

Question 3

WHAT IS A BASIC ACCOUNT?

Adv & Disadv

Answer 3

Offer only SOME of the features of a standard account to those with low credit rating who otherwise might struggle to open a current account.
Customers are seen as a high risk and therefore not offered credit.
Can still pay money into the account and make cash withdrawals.
Advantages:
Available for customers with low credit rating. Offers a chance for the customer to work their way up to a standard account.
Disadvantages:
Limited facility, no debit card or overdraft facility.

Question 4

STUDENT ACCOUNT

Adv & Disadv

Answer 4

A current account designed to meet specific needs of students.
Includes process to pay university tuition fees. Standing order for accommodation. Limited overdraft facilities. Incentives (motivation) to join that particular bank. Payment of student loan in to the account.
Advantages:
Course fees and student loans can easily be handled. Bonuses may be offered, like discounts.
Disadvantages:
Overdraft facilities. Charges for overspending are high. Limited facilities.