Section A Understand The Importance Of Managing Personal Finance Flashcards

Question

How can planning your spending help you counter the effects of inflation

Answer 1

-save money for inflation -spend carefully -find cheaper dupes

Answer 2

A current account is an account with a bank or building society that is designed for frequent use. Money can be paid in and withdrawn on a daily basis without the need to give notice. Types: Standard Packaged, premium Basic Student

Answer 3

**pros:** - No charges on credit balances - Offers the holder a wide range of facilities. - Convenient for receiving regular payments **cons** - potentially high charges on the use of an overdraft facility - standard features only

Answer 4

**pros** - no charges on credit balances - offers wide range of facilities - convenient for receiving regular payments - offers the holder additional perks at a packaged price cheaper than acquiring them individually **cons** - additional monthly charge is frequently applied - package offered may not offer value for money or meet the needs of the individual account holder

Answer 5

**pros** - available to customers with a low credit rating - offers an easy first step for individuals to gain access to basic banking facilities **cons** - limited facilities

Answer 6

**pros** - course fees and student loans can be easily handled - bonuses offered are designed to meet the needs of learners **cons** - overdraft facilities could encourage overspending - charges for overspending are high - limited facilities

Answer 7

**Advantages:** - Most widely accepted form of exchange - Makes budgeting easier **Disadvantages:** - Can be lost or stolen - cannot be used online

Answer 8

A payment card that deducts money straight away from your account when you make a payment

Answer 9

**Advantages:** - Accepted almost everywhere - Good to keep track of money **Disadvantages:** - Can only spend what is in your bank account

Answer 10

A payment card that is used for purchases but can be paid for later

Answer 11

**Advantages:** - Accepted everywhere - Can pay later if you have an insufficient amount **Disadvantages:** - Must pay interest - Could lead to debt

Answer 12

**Advantages:** - It is secure because nobody else can cash it off but the recipient - No change has to be given **Disadvantages:** - Can be lost or stolen - It's a long process

Answer 13

the processing of money online into another account

Answer 14

**Advantages:** - Can pay someone instantly - easy and quick **Disadvantages:** - Potential scammers and fraud - If details are wrong money may go to a different person

Answer 15

An arrangement made with a bank that allows a third party to take money at an agreed date

Answer 16

**Advantages:** - Can be a varying amount - Done automatically **Disadvantages:** - Wrong money may come out - There is no warning because it is automatic so you are unaware

Answer 17

It is like direct debit but it is set up by you and it is a set amount every month

Answer 18

**Advantages:** - You have more control - Set up personally by the payer **Disadvantages:** - It will keep going until you cancel it even if you don't have sufficient amount of money

Answer 19

Pre-paid cards, sometimes called everyday spending cards, are debit cards that operate on a pay-as-you-go basis. You can simply top it up with money whenever you want to use it and spend as you would normally.

Answer 20

**Advantages:** - Can set a budget in advance to avoid overspending - If lost or stolen the loss is limited to the remaining balance **Disadvantages:** - Sometimes requires an initial fee to purchase the card

Answer 21

**Advantages:** - Don't have to remember the pin - quick and easy process **Disadvantages:** - Can be stolen and used to pay

Answer 22

It is similar to a credit card, you buy things, pay back later with high interest

Answer 23

**Advantages:** - Can pay later **Disadvantages:** - can lead to debt - Must pay interest

Answer 24

It is like a credit card but for a particular store

Answer 25

**Advantages:** - No spending limit **Disadvantages:** - Must pay back a monthly charge, if not you pay high interest

Answer 26

**Advantages:** - Easy and quick - Can be accessed no matter where you are **Disadvantages:** - Cannot do everything on the app - hard to access customer service

Answer 27

It is a system that allows the transfer of payments directly from one bank account to another

Answer 28

**Advantages:** - Money will be in account within two hours - Can be accessed online or in a bank branch **Disadvantages:** - You can only transfer a certain amount

Answer 29

It is a system that allows the transfer of payments directly from one bank account to another

Answer 30

**Advantages:** - No limit to transfer - Can be accessed online or in a bank branch **Disadvantages:** - Time limit to transfer money; for example, you must transfer by two PM or will be transferred next day

Answer 31

What you must pay for your insurer to insure you

Answer 32

Insurance excess is the amount you have to pay towards the overall cost of an insurance claim. It's usually a pre-agreed amount. Your insurer will then contribute the rest

Answer 33

Risk affects how much your insurance will cost, and how many times you claim

Answer 34

1. Comprehensive If you crash it covers both cars involved. It covers theft, fires etc. 2. Third party Only covers The other car involved in the crash

Answer 35

**Pros** - It is flexible and simple to arrange **Cons** - Limits to how much you can borrow - Usually high interest - The bank decides when you must pay back by

Answer 36

**Pros** - Higher borrow limit - Builds a credit score **Cons** - Still interest added - Potential credit score damage

Answer 37

**Pros** - Pay in small amounts - Payment flexibility - No taxes charged **Cons** - Higher cost of financing - Loss of any returned goods

Answer 38

**Pros** - Different types of mortgages available - Gradual payments **Cons** - Takes awhile to process before it can start - Puts you into a lot of debt

Answer 39

**Pros** - Fraud protection - Paying for purchases over time **Cons** - Pay interest - Credit can be damaged - Could overspend and get into debt

Answer 40

It is a short time loan for small amounts of money

Answer 41

**Pros** - Flexibility - Small amounts paid easily **Cons** - High interest - Not for long term

Answer 42

An investment product where you can win money in monthly draws

Answer 43

Investing into the business or if a gilt - the government, to help with public spending – in return you receive interest.

Answer 44

**Pros** -greater flexibility -easy to transfer -easy to open and access -inheritance benefits -potential to earn interest **Cons** -income tax implications -no quick investments -not easy to withdraw funds

Answer 45

**Pros** -steady interest -keeps money safe -enables instant pay services -automated bills payment **Cons** -Variable interest rates may change -transaction limits may apply -fees may be charged depending on the bank -interest rates typically lower

Answer 46

**Pros** -lower overall charges -tax relief on contributions -easier management of pension savings with just one scheme. **Cons** -lack of access until you are of age -risk of poor returns -not all pensions are transferable -risk of company bankruptcy

Answer 47

**Pros** -have a prize draw and can win a large amount of money -backed by government -tax free -easy access -easy withdraw led anytime -no risk of losing money **Cons** -don’t earn any interest -risk of overpayments -no regular income

Answer 48

**Pros** -investment returns are fixed -offers regular interest payments -safe investment **Cons** -exposed to inflation -low risk -if the business doesn’t do well, you can lose your money

Answer 49

**Pros** -limited liability for the debts of the company -ability to invest in different sectors -ownership stake of a business -claims on assets and dividends of a company **Cons** -risk of losing money -privacy issues -taxes on dividends

Section A Understand The Importance Of Managing Personal Finance Flashcards

(73 cards)