LOA

Question 1

what does Units Of Accounts mean

Answer 1

Look at the value and understand it . This allows us to compare items by its value

Question 2

What does means of exchange mean

Answer 2

Money allows goods and services to be traded without the need for a barter system.

Question 3

what does store of value mean

Answer 3

Refers to any assets whole ‘value’ can be used now or used in the future

Question 4

What does legal tender mean

Answer 4

A legally recognised form of payments that is hacked by the government

Question 5

What is personal attitude?

Answer 5

Your attitudes towards risks and rewards will you take the chance to make money or do you Prefer to play it safe and save. How you balance the way you borrow spend and save.

Question 6

What is life stages?

Answer 6

As you go through each of the five main life stages, childhood adolescence, young adult, middle age, old age of financial priorities and needs will change

Question 7

How does culture influence your view of money?

Answer 7

Your background or culture, Including religious belief or ethical principles may shape your view of money

Question 8

How does life events influence your view of money?

Answer 8

Major life events such as moving home or being made redundant can affect your view of the importance of money

Question 9

How does external influences influence your view of money?

Answer 9

These include events outside your control such as the state of the economy or the availability of jobs in your area

Question 10

How does interest rate influence your view of money?

Answer 10

Interest rates can have a big impact on whether you decide to save or borrow low interest rates are good for borrowers but not for savers while high interest rates to make money expensive to borrow but savers receive more interest on their deposit

Question 11

Why should you plan expenditures?

Answer 11

Counter the effects of inflation
avoid into getting debt
controlled cost
remain solvent
maintain a good credit rating
avoid bankruptcy,
financial target
manage money to fund purchases
generate income and saving
provide insurance against losses or illnesses
avoid legal action

Question 12

What are the benefits of planning?

Answer 12

A good credit rating means you will be able to borrow money to find a large purchase such as a car or your home

money not spent on essential can be saved and earn interest to generate an income

saving can be used to fund purchases or be available to pay for unexpected expenses.

Question 13

What are the risks of not planning?

Answer 13

Getting into debt because you cannot pay bills

having insufficient funds to pay loans repayment

having legal action taken against you for
non - payment of loans or losing goods that you are unable to pay for

a poor credit rating which affects your ability to borrow money

not being able to save for the future

Question 14

How can you pay with cash?

Answer 14

Accepted in most places
can be stolen or counterfeited
cannot be used for a online purchases

Question 15

How can debit cards be used as a payment method?

Answer 15

These are issued by the bank. Payment is taken directly from the card holders bank account
secured method is no need for cash

contactless card can be used for small amount.
Small risk of cardholder overspending

can be used for online purchases which may encourage over spending

risk that card details may be hacked.

Question 16

How can credit cards be used as a payment method?

Answer 16

It should by banks and financial companies.
Goods and services are paid for directly by the card issuer
card holders receive short interest free period usually a month on amount borrowed
card issue is charge interest on the balance outstanding after the interest free period
risk of cardholder over spending and getting into debt
can be used for online purchases which may encourage over spending
risk that the car details may be hacked some retailers charge fee for payments made by credit card

Question 17

How can cheques be used as a payment method?

Answer 17

issued to bank customers
customers
* A written order to pay a sum of money from a bank customer’s account to another person or organisation (payce)
* fairly secure method as only the payee can cash the cheque
-Once the payee cashes the cheque, It takes at least three days for the amount to be available in their account
* Although still widely used, some retailers no longer accept cheques

Question 18

What is this payment method Electronic transfer - direct payment

Answer 18

• Payment is made directly between bank accounts
• Easy to set up and use
• Transfer is instant
  • Bank detalls of third party he correct: otherwise trans

Question 19

How can this payment method Direct debit - an instruction to pay be used

Answer 19

• An instruction to a bank authorising a third party (payee) to collect varying amounts of money from the person’s bank account (payer)
• Simple way to pay regular bills - the amount is deducted automatically from the payer’s bank account
• Payee may vary amounts making it difficult for payer to plan expenditure
• Payer must have sufficient funds in their bank account to cover the payment

Question 20

How can this payment method be used Standing order - an instruction to pay

Answer 20

• An instruction to a bank from an account holder to make regular set payments to a person or organisation
• Payments do not change, allowing the payer to plan their expenditure
• Payments are made automatically and continue until cancelled by the payer
• Payer must have sufficient funds in their bank account to cover the payment

Question 21

How can Prepaid cards - cash loaded onto a card which can be used to make purchases be used as a payment method

Answer 21

• Widely accepted by retailers
• Cannot spend more than the amount of cash on card - may help with control of expenditure
* Iflost or stolen, the cash on the card is lost
• Some cards have set-up and transaction fees

Question 22

How can this method Contactless cards
payment is made when card touches terminal be used

Answer 22

• Fast, easy and secure
• Usually for amounts less than 930
• Cardholder can lose track of how

Question 23

How can Charge cards - issued by financial companies be used

Answer 23

• A short-term, interest-free loan. Cardholder can buy goods and services without paying for them immediately but balance must be paid in full at end of every month
• Annual fee is payable; charge card companies réquire customers to have a certain level of annual income

Question 24

How can Store cards - issued by retailers be used as a payment method

Answer 24

• Similar to a credit card but only accepted by store that issues it
• Cardholders may benefit from discounts and loyalty schemes
• Interest payable on balance unless paid off in full each month
• Risk of cardholder overspending and getting into debt

Question 25

how can Mobile banking - online banking using an app be used as a payment method

Answer 25

• Bank account holder manages their account through their smartphone or tablet * Allows account holder to check balances, make payments and transfers • Secure, can be used wherever the account holder has access to internet • Service limited compared with internet banking * May not be able to access the full range of banking services

Question 26

How can this method be used for payments - BACS and Faster Payments

Answer 26

electronic payment from one bank account to another * BACS - takes three days to transfer payment from one account to the other • Faster Payments - transfer takes place within two hours • Usually no fee

Question 27

how can CHAPS - electronic payment from one bank account to another be used as a payment method

Answer 27

• Guaranteed same-day transfer as long instructed by a certain time * A fee is charged

Question 28

What are current account

Answer 28

There are 4 types of - standard ,premium,student,basic accounts

Question 29

What is a standard account

Answer 29

Customers must have a fair credit rating. Features include: • no banking fees • cheque book and bank card, often with contactless payment • facility to set up direct debits/standing orders to pay bills • salary can be paid directly into the account • overdraft facilities - the interest may be high.

Question 30

What is a premium account

Answer 30

2 Packaged, premium account This is similar to a standard account but offers additional features for a monthly fee. These include:• packaged benefits such as travel insurance or discounts on goods and services - customers have to pay for these even though they may not want them • interest on credit balances • cash back on household bills paid by direct debit • special rates of interest on overdrafts • some of the bencfits provided may not be required or used by the account holder.

Question 31

what is a student account

Answer 31

This is aimed at learners in higher education to help them manage their finances. It has limited features, which include: • interest-free overdraft up to a certain limit - if you go over the limit, the interest can be very high • debit card • some accounts offer a free gift card or travel discounts.

Question 32

what is a basic account

Answer 32

This is a no-frills account aimed at customers with a poor credit rating. It is similar to a standard account but with no overdraft facilities. Features include: • no banking fees • debit card • facility to set up direct debits to pay bills.

Question 33

What are the 6 types of borrowing

Answer 33

Overdraft Personal loan Hire purchase Mortgage Credit card Payday loan

Question 34

What is overdraft

Answer 34

This is a short-term loan which can be used to pay bills if you are short of cash. You arrange with the bank to borrow money up to an agreed amount when the balance on your current account reaches zero. 👍Usually free to set up. You only pay interest on the money you borrow. 👎 Interest is high and you will be charged a fee to use your overdraft. If you go over the limit or have an unarranged overdraft, there will be penalty charges.

Question 35

what is personal loan

Answer 35

This can be used to buy expensive items, such as houschold goods or a car. You borrow a fixed amount and pay it back in set monthly instalments, usually over a period of one to five years, at a fixed rate of interest. 👍Monthly instalments allow you to plan your expenditure. 👎There may be arrangement fees, which can add to the cost. If you fail to make payments on a secured loan, you may lose the asset it is secured against.

Question 36

What is hire purchase

Answer 36

This is usually used to buy a car. You put down a deposit, then pay monthly instalments over a period of one to five years. During the payment period, you hire the car; once the instalments are paid, you own the car, 👍Allows you to buy an expensive item at an amount you can afford. 👎While you are paying you cannot sell the car because you don't own it. If you fall behind with payments, then the lender may repossess the car.

Question 37

What is a Mortgage

Answer 37

This is a loan taken out to buy a property. It is usually for 25 years and you pay off the mortgage in monthly instalments. 👍Allows you to buy your home and spread the cost over a long period. Fixed or tracked mortgage rates can help make payments affordable. 👎An increase in interest rates may affect your ability to pay back the mortgage. The property is used as security for the loan, If repayments are not made, the property can be repossessed.

Question 38

What is a Credi card

Answer 38

You can use this to buy goods and services in shops, online, by post and on the phone. You may spend up to the amount of the credit limit on your card. At the end of each month, you will receive a statement showing how much you owe. 👍 If you pay the full amount each month, you will pay no interest. 👎If you pay the minimum amount shown on the statement, you will be charged interest on the outstanding amount. Interest rates are higher than a personal loan.

Question 39

what is a payday loan

Answer 39

This is a short-term loan, usually for small amounts, often when people need cash to pay bills between paydays. A fee is charged. 👍Can help with cash-flow problems. 👎Very expensive way to borrow.

Question 40

What are the 2 ways of saving

Answer 40

ISA or deposit and saving account

Question 41

wha is an individual savings account

Answer 41

Incividual savings account a An ISA allows you to save without paying tax on the interest or profits you earn. There is a limit on the amount you can put into an ISA each year. You may need to give notice if you wish to make a withdrawal. There are two main types of I5A. • Cash ISA: a savings account where interest is paid tax-free. • Stocks and shares ISA: funds are invested in shares or bonds, and profits/returns earned are tax-free. Cash ISAs are less risky than stocks and shares ISAs. Stocks and shares ISAs have the potential for significant capital gains but could also result in financial losses, Stocks and shares ISAs charge a management fee. In addition, there are now two more types of ISA. • Innovative finance ISA: interest is earned from lending money to other people or companies through peer-to-peer lending. • Help to buy ISA: launched in 2015 for first-time buyers to help them save to buy property.

Question 42

What is a Deposits and savings account

Answer 42

Deposit and savings accounts • An easy access savings account allows you instant access to your savings. Other savings accounts may ask for notice to withdraw money. This type of account pays a variable amount of interest which is taxable. • A fixed deposit account pays a set amount of interest over a set period of time. You are not allowed to make withdrawals during this time. Protected savings The Financial Services Compensation Scheme (FSCS) guarantees deposits up to a set limit of £85000 (in 2017) per investor per bank or building society.