Financial Service Providers

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

Credit card

Answer 2

A card that allows the holder to make purchases face to face, online or over the phone, and to withdraw cash from an ATM. Unlike a debit card, where the money is taken from the holder’s own account, transactions are paid by the card provider. The card holder repays the amount owed to the provider either in one payment or in instalments. The provider charges interest on cash withdrawals from the time the withdrawal is made and on purchases after a certain period

Question 3

Credit union

Answer 3

A mutual organisation (that is, owned by its members) that provides a range of financial products to members, eg savings accounts and personal loans. Members of a credit union must share a common bond, eg all work for the same employer or all
work in the same district

Question 4

Current account

Answer 4

Bank or building society accounts where people can store their money in the form of electronic balances and withdraw it to make payments

Question 5

Debit card

Answer 5

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 6

Direct debit

Answer 6

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

Question 7

Overdraft authorised

Answer 7

A facility that allows an account holder to withdraw more money than they actually have in their account. An authorised overdraft is agreed with the bank in advance within certain limits.

Question 8

Overdraft unauthorised

Answer 8

Exceeding those limits or going overdrawn without permission is an unauthorised overdraft, and attempted withdrawals may not be honoured