What is an Overdraft?
Allows you to spend more money than you have in your Current Account
What are Personal Loans?
Loans you can take out to buy things you can’t currently afford
What is a Hire Purchase?
Monthly payments for ‘mid-sized’ purchases e.g. TV, washing machine
What are Credit Cards?
A payment card that lets you borrow money to pay for goods and services
What is a mortgage?
Big loan secured against property
What are Payday Loans?
Get short term loan to cover expenses
Positives/Negatives of an Overdraft
Positives:
Get access to cash
Easy to arrange
Pay interest only on what you borrow
Good for short term money
Negatives:
Really expensive
High interest or possibly charges too
Can encourage spending money that isn’t yours
Positives/Negatives of Personal Loans
Positives:
Easy to arrange
Cheaper than overdraft
Spread the cost over a longer time frame
Negatives:
You get potentially more than you need and overspend
Expensive way to borrow money
Positives/Negatives of a Hire Purchase
Positives:
Get access to goods straight away
Spread the cost over a long time
Negatives:
You pay more than the actual price
They can remove the asset if you don’t keep up with repayments
Positives/Negatives of Mortgages
Positives:
Enables big purchases e.g. houses
Spreads the cost (usually 20-25 years)
Negatives:
Variable role repayments could increase
If don’t repay can lose house
Positives/Negatives of Credit Cards
Positives:
Able to buy things you want
Earn points
Negatives:
High interest rates
Effects your credit score if you don’t pay
Positives/Negatives of Payday Loans
Positives:
Get hold of cash immediately
Negatives:
Interest is very expensive
