Key Terms 5 (Methods Of Payment, Types Of Current Accounts, Types Of Borrowing) Flashcards
(22 cards)
What is the definition of Cash?
Notes and coins in a wide range of denominations.
Cash is a physical form of currency used for transactions.
What is a Debit card?
Issued by banks with payments for goods and services being deducted directly from a current account.
Debit cards are linked to a checking account and allow for direct access to funds.
What is a Credit card?
Issued by financial institutions allowing customers to delay payments for goods and services.
Credit cards usually come with a credit limit and charge interest on unpaid balances.
What is a Cheque?
A written order to a bank to make a specific payment for a specific amount of money from one person’s account to another account.
Cheques are less common today but are still used for certain transactions.
What is an Electronic transfer?
Payment is transferred directly from one bank account to another.
This includes various methods like wire transfers and online banking.
What is a Direct debit?
An agreement made with a bank allowing a third party to withdraw money from an account on a set day to pay for goods or services received e.g. electricity bill.
Direct debits are often used for recurring payments.
What is a Standing order?
An agreement made with a bank to transfer a fixed sum of money to a third-party account on a set date on a regular basis e.g. a fixed loan repayment.
Standing orders are typically used for fixed payments.
What is a Pre-paid card?
Money is uploaded onto a card with transactions then withdrawn to reduce the balance.
Pre-paid cards can be used like debit cards but do not require a bank account.
What is a Contactless card?
Cards with an embedded chip and antenna that enable consumers to wave their card over a reader at the point of sale for an automatic transaction.
Contactless payments are designed for convenience and speed.
What is a Charge card?
Issued by financial institutions allowing customers to delay payments for goods and services for a short period of time with the balance being paid off in full at each statement date.
Charge cards typically do not have a preset spending limit.
What is a Store card?
Issued by a retail outlet to allow customers to delay payments for goods and services - similar to a credit card but only for the store(s) specified.
Store cards often offer discounts or rewards for purchases made at the issuing store.
What is Mobile banking?
The ability to carry out financial transactions using mobile devices such as phones or tablets.
Mobile banking apps provide access to account information and transaction capabilities.
What is the Automated Clearing Service (BACS)?
A system that allows the transfer of payments directly from one bank account to another in 3 working days (unless faster payment is available).
BACS is commonly used for payroll and direct debits.
What is Faster Payment?
A system that allows the transfer of payments directly from one bank account to another, usually on the same day.
Faster Payments are designed for urgent transactions.
What is a Standard current account?
This type of account provides full day-to-day banking facilities e.g. cheque book, debit card, easy access to your money and an authorised overdraft facility.
Standard accounts are suited for general banking needs.
What is a Packaged, premium current account?
This type of account usually has an annual fee or additional charge in return for offering extra incentives.
Benefits may include insurance offers and fee waivers.
What is a Basic current account?
This account offers limited features and would be typically held by a person with no credit history in the UK or a poor credit history.
Basic accounts are designed to help individuals manage their finances.
What is a Student current account?
These are designed to assist young people and students to become prudent with their personal finances. They may come with bonus features, such as interest-free overdraft facilities.
Student accounts often have lower fees and better terms for young adults.
What is an Overdraft?
Allows an individual to withdraw money from a current account that they do not actually have.
Overdrafts can incur fees and interest if not managed properly.
What is a Personal loan?
Allows an individual to borrow a set amount of money which is to be repaid in regular instalments, with interest.
Personal loans can be used for various purposes such as home improvements or debt consolidation.
What is Hire Purchase?
A method of buying goods through a series of payments.
Typically used for vehicles and expensive items.
What is a Mortgage?
A long-term loan to fund the purchase of assets e.g. property which will be repaid over a long period e.g. 25 years.
Mortgages are secured against the property being purchased.
