Different Ways To Pay

Question 1

2 advantages of cash?

Answer 1

Accepted in most places
Easy to control expenditure

Question 2

2 disadvantages of cash?

Answer 2

Can be lost or stolen
Can’t be used for online purchases

Question 3

2 advantages of using a debit card? (Issued by banks)

Answer 3

Can be used for online purchases
Widely accepted

Question 4

2 disadvantages of using debit cards?

Answer 4

Can lose track on how much you are spending
Risk of card details getting hacked

Question 5

2 advantages of using credit cards?

Answer 5

Allows the cardholder to buy now and pay later
Widely accepted, used online or in store

Question 6

2 disadvantages of using credit cards?

Answer 6

Interest charged on balances not paid off after the interest-free period
Risk that card details may be hacked

Question 7

2 advantages of using a cheque

Answer 7

Fairly secure as the cheque can only be cashed by the payee
Can send in post if don’t want to pay online

Question 8

2 disadvantages of using a cheque

Answer 8

Once the payee cashes the cheque, it takes at least 3 days for them to receive the amount
Can be forged, thus some retailers may not be willing to accept

Question 9

2 advantages of using electronic transfer (direct payment)

Answer 9

Can be done remotely
Transfer is instant

Question 10

2 disadvantages of electronic transfer (direct payment)

Answer 10

Not appropriate for face to face transactions
Bank details of third party must be correct; otherwise transfer will not take place or it may be sent to the wrong person

Question 11

2 advantages of using direct debit
(an instruction to pay)

Answer 11

Easy way to make regular payments and ensures they are not missed
Payment varies automatically to match the amount required, saves time doing it urself

Question 12

2 disadvantages of using direct debit

Answer 12

Payer must have sufficient funds in their bank account to cover the payment
Payee may vary amounts, making it difficult for payer to plan expenditure
Payer may forget to cancel their payments which will cause unnecessary loss of money

Question 13

2 advantages of using a standing order

Answer 13

Same amount is paid each time, allowing the payer to plan their expenditure
Payments are made automatically which saves time for the payer having to manually pay the payee each time

Question 14

2 disadvantages of using a standing order

Answer 14

Payer must have sufficient funds in their bank account to cover the payment
Payer may forget to cancel their payments which will cause unnecessary loss of money

Question 15

2 advantages of using prepaid cards

Answer 15

Can set a budget in advance, to avoid overspending
If lost or stolen, the loss is limited to the remaining balance

Question 16

2 disadvantages of prepaid cards

Answer 16

Maybe initial fees to setup the card
If lost or stolen, the cash on the card is lost

Question 17

2 advantages of contactless cards

Answer 17

Secure method of payment
Quick and efficient to make a transaction

Question 18

2 disadvantages of using contactless cards

Answer 18

Cardholder can lose track on how much they are spending
Only accepted for transactions usually less than £50

Question 19

2 advantages of using charge cards

Answer 19

No interest rate
High spending limit or no spending limit at all, as long as you are paying off the debt at the end of the month

Question 20

2 disadvantages of charge cards

Answer 20

Payments must be paid in full at end of every month
Expensive fees for those who do not pay on time

Question 21

2 advantages of using store cards - issued by retailers

Answer 21

May reward frequent shoppers with additional benefits such as discounts
Can choose how much to pay each month above a minimum amount

Question 22

2 disadvantages of using store cards (can buy on credit in one or more shops)

Answer 22

Risk of cardholder overspending and getting into debt
High interest rates on outstanding balances

Question 23

2 advantages of mobile banking -online banking using an app

Answer 23

Can be used wherever there is an internet connection
Can check balance, make payments and transfers

Question 24

2 disadvantages of mobile banking

Answer 24

May not be able to access the full range of services
Customer must have phone

Question 25

2 advantages of BACS

Answer 25

Can pay multiple people at once
No fee for sender

Question 26

1 disadvantage of BACS

Answer 26

Takes 3-5 days

Question 27

2 advantages of CHAPS
(Eg houses, cars)

Answer 27

Transfers can be made on same day
No limit on amount you can send

Question 28

2 disadvantages of CHAPS
(Eg houses, cars)

Answer 28

Fee for each transaction
Not used for small purchases

Question 29

2 advantages of Faster Payments
(Eg standing orders)

Answer 29

Guaranteed within 2 hours
Available 247

Question 30

2 disadvantages of Faster Payments (Eg standing orders)

Answer 30

Limit on value usually £250k
Can only pay one person at a time