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Business Unit 2 > Learning aim A > Flashcards

Learning aim A Flashcards

Understand the importance of managing personal finance (45 cards)

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1
Q

What are the functions of money?

A

Unit of account
Means of exchange
Store Value
Legal Tender

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2
Q

What factors effect the role of money?

A
  • Personal attitudes towards risk, reward, borrowing, spending, and saving.
  • Life stages
  • External factors
  • Interest rates
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3
Q

What are the benefits of planning expenditure?

A
  • Surplus money to save
  • Savings can provide security
  • Good credit rating
  • Avoid debt
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4
Q

What are the advantages of using Cash?

A
  • Easy to budget
  • Widely accepted
  • Physical not digital
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5
Q

What are the disadvantages of using Cash?

A
  • Easily lost
  • Easy to steal
  • Cannot be used online
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6
Q

What are the advantages of using a Debit Card?

A
  • Secure
  • Low risk of theft
  • Can be used online
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7
Q

What are the disadvantages of using a Debit Card?

A
  • May have minimum spending limits
  • May overspend on card
  • Potential to go into an overdraft
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8
Q

What are the advantages of using a Credit Card?

A
  • Period if interest free credit
  • Protection online
  • Loyalty schemes / cash back
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9
Q

What are the disadvantages of using a credit card?

A
  • Interest charged if not paid in full
  • Encourages overspending and debt
  • Charges on cash withdrawals
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10
Q

What are the advantages of cheques?

A
  • Good for large transactions
  • No needs to carry large amounts of cash
  • Good for postal transactions
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11
Q

What are the disadvantages of cheques?

A
  • Time delay between writing cheque and it being cleared
  • Places are fazing out of this payment method
  • Error made easily when writing
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12
Q

What are the advantages of using Contactless?

A
  • Very popular
  • Quick
  • Safe
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13
Q

What are the disadvantages of Contactless?

A
  • Limited amount of daily transactions
  • Can one be used for small amounts
  • Not available everywhere
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14
Q

What are the advantages of mobile banking?

A
  • Convenient
  • Secure
  • 24/7
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15
Q

What are the disadvantages of using mobile banking?

A
  • Limited features compared to Internet banking and banking in a branch
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16
Q

What are the advantages of using direct debits?

A
  • Quick and easy
  • Convenient for paying bills
  • Good pay to stay on top of paying bill on time
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17
Q

What are the disadvantages of using direct debits?

A
  • Needs monitoring to ensure correct amounts are being collected
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18
Q

What are the advantages of a standing order?

A
  • Same amount is paid each time
  • Easy to set up and cancel
  • Easy to budgeting
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19
Q

What are the disadvantages of using a standing order?

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A
  • Payments are taken regardless of customers bank balance which may result in being overdrawn
  • Payments will continue until cancelled
20
Q

What are the advantages of using an electronic transfer?

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A
  • Fast method of payment
  • Payment recorded
  • Easy to do
21
Q

What are the disadvantages of an electronic transfer?

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A
  • Could transfer to the wrong person
  • Risk of loss if incorrect
  • No appropriate for purchases in person
22
Q

What are the advantages of pre-paid cards?

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A
  • Avoids overspending
  • If lost can not be overdrawn
  • Good way of controlling spending
23
Q

What are the disadvantages of pre-paid cards?

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A
  • May cost money to set up
  • No protection if lost
24
Q

What are the advantages of a charge card?

Study These Flashcards
A
  • Get a shot period of credit
  • No need to carry cash
  • Additional perks
25
What are the disadvantages of a charge card?
- Full payment required each month - Annual fixed fee
26
What are the advantages of store cards?
- Short period of interest fee credit - Special offers and promotions for that store
27
What are the advantages of store cards?
- Can only be used in specified stores/places - Interest is charged on balances - Can encourage debt on consumer goods
28
What are the advantages of BACS?
- Guarantees instant payment within 2 hours - No additional costs - Used in brach, phone or online
29
What are disadvantages of using BACS?
- Limited amount in a single transaction - Service not offered by all banks
30
What are the advantages of using CHAPS?
- No limit on the amount in a single transaction - Same day transfer
31
What are the disadvantages of CHAPS?
- Fixed charge for the transition
32
What are the different types of current accounts?
- Standard - Basic - Premium / packaged - Student
33
What are the advantages of a Standard current account?
- No charges on credit balances - Range of facilities - Convenient for receiving wages and withdrawing money
34
What are the disadvantages of a Standard account?
- Potentially high charges on overdraft - Standard features, no additional perks
35
What are the advantages of basic current accounts?
- Available to customers with a low credit rating - Easy first step for banking - Ability to pay in and withdraw cash
36
What are the disadvantages of basic current accounts?
- Limited facilities - No debit card - Overdraft facilities
37
What are the advantages of student accounts?
- Course fees and loans can be easily handled - Added extras are designed to meet the needs of students (rail and food card)
38
What are the disadvantages of student accounts?
- Overdraft facilities could encourage overspending - Charges for overspending are high - Limited facilities
39
What are the advantages of premium/packages accounts?
- No charges on credit balances - Range of facilities - Convenient for receiving wages and withdrawing money - Additional perks ( travel insurance)
39
What are the disadvantages of premium/packaged accounts?
- Additional monthly charges - May not provide value for money for certain individuals
40
What are the different types of borrowing products?
- Overdraft - Personal loans - Hire purchase - Mortgages - Credit cards - Payday loans
41
What are the advantages of an overdraft?
- Flexible - Quick to arrange - There is no change is the customer pays off the amount of money owed quicker
42
What are the disadvantages of an overdraft?
- Interest rates can be high - Bank can reduce the limit or cancel overdraft at any time - Easy to stay in the overdraft
43
What are the advantages of using personal loans?
- Lower interest rates - Easier to manage - Help to pay for emergency expenses
44
What are the disadvantages of personal loans?
- Fee's and penalties can be high - potential credit damage - Higher payments than credit cards

Business Unit 2 (6 decks)

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