Topic 6 key terms(borrowing products)

Question 1

APR

Answer 1

definition:annual percentage rate,the total cost of borrowing over one year,includes interest charge on any fees

Question 2

ATM

Answer 2

definition:cash machine

Question 3

bank rate

Answer 3

definition:interest rate that the bank of England uses when it lends money to other banks

Question 4

balance transfer

Answer 4

definition:moving the balance on a card from one card provider to another

Question 5

basic bank account

Answer 5

definition:a current account that allows people to store their money as an electronic balance and make payments by direct debit,standing order,prepaid cash card or by withdrawing cash

Question 6

card verification value (CVV)

Answer 6

definition:three numbers on the back of a credit or debit card

Question 7

cash back card

Answer 7

definition:a type of card that gives back to the cardholder a percentage of the value of transactions made with the card in the form of cash

Question 8

charge card

Answer 8

definition:credit card that must be repaid in full every month

Question 9

cheque

Answer 9

definition:a written instruction to the provider to pay a specified amount to a specified person or organisation

Question 10

consumer credit

Answer 10

definition: another term used for borrowing,’taking credit’ or “buying on credit’ refers to borrowing,credit into a bank account means paying
money in

Question 11

cost of borrowing

Answer 11

definition: This is the total amount that the borrower will be charged including interest and any fees,personal loans and credit card borrowing the cost over a 12 month period must be quoted

Question 12

credit agreement

Answer 12

definition: formal agreement between a provider and a borrower setting out the amount borrowed,interest charged,arrangements for repayment and any other conditions

Question 13

credit card 

Answer 13

definition: card that allows the holder to make purchases face to face,online or over the phone, and to withdraw cash from an ATM the transactions are paid by the card provider(bank), card holder repays the amount owed to the provider either in one payment or in instalments

Question 14

credit history

Answer 14

definition: record of money borrowed and repaid by an individual,these
records are held by credit reference agencies and providers will
check the individual’s credit history when customer applies to borrow

Question 15

credit union

Answer 15

definition:a mutual organisation that provides a range of financial products to members,members of credit union must share a common bond

Question 16

current account

Answer 16

definition: bank or building society account where people can store their
money in the form of an electronic balance and withdraw to make payments

Question 17

debit card

Answer 17

definition: card that can be used to withdraw cash,make face-to-face
transactions in shops and to make payments online

Question 18

direct credit

Answer 18

definition: An electronic payment into an account like a salary or benefits

Question 19

direct debits

Answer 19

definition: electronic payment out of an account,amount and frequency of a direct debit payment can vary

Question 20

EAR

Answer 20

definition:equivalent annual rate-cost if borrowing using an overdraft

Question 21

interest

Answer 21

definition: Money either paid to an account holder by the provider, or
charged to the account holder by the provider,Interest is paid on savings accounts and some current accounts and charged on borrowing

Question 22

interest rate

Answer 22

definition: The amount,expressed as a percentage,that a financial services
provider pays to a saver,or charges a borrower when it lends money

Question 23

mortgage

Answer 23

definition: loan taken out to pay for a property usually over a long term

Question 24

overdraft

Answer 24

definition: facility that allows an account holder to withdraw more money than they actually have in their account

Question 25

payday loan

Answer 25

definition: A loan designed to be taken out for only a very short period charges a very high APR

Question 26

payment allocation

Answer 26

definition: The order in which a card provider uses money paid into an account to pay off the amount outstanding

Question 27

personal loan

Answer 27

definition: A product that allows someone to borrow a fixed amount over a fixed period at a fixed rate of interest

Question 28

standing order

Answer 28

definition: electronic payment out of an account,Standing orders are used to make regular payments of the same amount

Question 29

store card

Answer 29

definition: A card issued by a retailer that the holder can use to make purchases within that store or group of stores,like a credit card, the amount owing is paid off at a later date