Flashcards in Chapter 9 + 10 - Money And Personal Banking (commercial banks) Deck (39):
Is the exchange (swapping) of one good for another
Functions of money
• A means of exchange : we give money in exchange for items we want or need
• It is a measure of value (unit of account)
• A means of saving
• A system of credit (by now pay later) : you can borrow money from a bank or building society to buy goods such as a house and repay the money over a period of time
Modern forms of money
Cash or currency is issued by the European Central Bank (ECB)
Modern forms of money - cheque
A written instruction to a bank to pay a sum of money to a named person/buisness
You can buy a bank draft by paying the money and they in turn make the draft payable to a specific payee
The travellers cheque can be exchanged for cash in a bank or Bureau de Change in a foreign country
a.k.a - plastic money
Debit card (laser card)
• Money goes from the customers bank account to the sellers bank account
• Each user has their own individual PIN number
• Uses a “ chip and pin ” system like a laser card.
• The credit card company pays the shop (the money does not come out of the customers bank account). The customer will be given a statement of account by the credit company.
• The customer has 28 days to pay the credit card company.
• If they do not pay up the full amount in 28 days they can be charged interest.
Charge cards are used in the same way as credit cards, however the amount owed must be paid in full once the customer receives their statement
• They can be used by banking and non banking customers.
• They work similarly to a prepaid phone
An employer transfers an employee's wages/salary directly from their bank account to the employee's bank account.
Standing order (SO)
A bank account holder instructs the bank to pay a fixed amount of money to a particular person/company at the same time every month.
A bank account holder instructs the bank to allow a certain company take a varied amount of money from their bank account on a regular basis. The bank account holder has filled in a form giving the company permission to take the money and line form states how much they can take.
Transferring money from one bank account to another persons bank account. It can be done online on Internet banking.
The customer registers their financial details with PayPal. They can then use PayPal to pay for online purchases. PayPal will transfer the money on behalf of the customer to the seller. This way they do not have to disclose their bank account or credit card details to a large number of different sellers.
Functions of a commercial bank :
• current accounts, including overdrafts
• deposit accounts
• payment services for customers (paying for goods purchased)
• ATM machines
• night safes
• 24-hour banking services
• foreign currency exchange
Your ability to pay back a loan
The practise of hiding the source of money. It is a crime
• account that people get their wages/salary paid into.
• It is used to pay for day to day expenses
• the account holder will be given a debit card for the account
What does a cheque have on it ?
1. Signature of the drawer
2. Name of the drawer
3. Name of the payee
4. The date the cheque was written
5. The amount in both words and figures
6. A revenue stamp
7. The cheque number
8. The banks sort code
9. The customers bank account number
10. The counter foil
1. Amount lodged
2. Account holder name
4. Account number
6. Paid in by
7. Account holder address
1. Check signature of drawer on the card and the cheque
2. Write card number on back of check
3. Expiry date on card
4. Payee will make the drawer sign the cheque in their presence.
Cheque guarantee card (bankers card)
Is presented to the payee by the drawer when the drawer is purchasing goods/services. The correct use of the card ensures that the bank will honour the cheque up to a sum of €130 even if there is no money in the drawers account
Obtaining money from a cheque
• lodge it in an account
• cash it in the bank
•sell it (endorse it - this means signing it at the back and giving it to someone else).
A stale cheque
Is one that has not been cashed or lodged within 6 months of the date written on it
A post-dated cheque
Is a cheque with a future date on it and cannot be cashed until that date
What is a crossing on a cheque ?
A crossing on a cheque is an instruction to pay the Monet due on the cheque only into a bank account.
What are the three ways to cross a cheque ?
Dishonouring a cheque
1. It hasn't been filled out correctly
2. The cheque is post-dated
3. The cheque stale
4. The bank is suspicious of the signature
5. The drawer does not have enough money in their account
6. The drawer has asked the bank not to pay the money to the payee.
7. Their is a court order freezing all transactions on the account
1. Using a cheque
2. Using an ATM
3. Laser card/Debit card
4. Direct Debits and Standing Orders
5. Taking out your money «over the counter»
An Ante-Dated cheque
Is a cheque that bears a date prior to the date that the cheque was written
Permission is given to a current account holder to withdraw more money from the account than is in the account.
1. Small amounts
2. Current account
• Are vaults which are outside the bank which allows customers to deposit cash and chequers after-hours.
• Customers are provided with a key and the money is then lodged to their account the following morning.
Internet banking/24-hour banking
1. Allows customers to access banking services 24 hours a day
2. Check balance
3. Check bank statements online
4. Order printed statements
5. Transfer funds to other accounts
6. Pay bills
7. Order cheque books
• These services are available online or by phone (phone hours may be restricted).
Foreign currency exchange
• Is the swapping of one currency for another
• Banks charge a fee for this service
The exchange rate is the number of units of a foreign currency given in exchange for on e euro.