learning aim B1-B3

• banks - advantages

  • Convenient locations - high streets and online
  • Wide range of services
  • Accounts to meet different needs e.g. student, young person
  • Confidence (generally feel money is secure)
  • Advice for individuals and business e.g. small business advisers
  • Interest paid on positive balances 
• banks- disadvantages

  • Conflict of interest between customers and shareholders
  • Interest charged on loans and overdrafts etc. can be high
  • High charges if default on repayments or exceed overdrafts including administration charges
  • Savings only covered up to £85 000. Beyond this if the bank fails savings can be lost
• credit unions who provide loans to their members and are a not-for-profit organisations funded by their members who save the money. often local
• credit unions- advantages

  • Anyone can join
  • Helps people who are unable to get a loan from a bank
  • Better terms than payday loans
• credit unions- disadvantages

  • Loans are usually small
  • Savings rates are often less than banks
  • Only a few have an online presence
• national savings and investments- features

  • State owned savings bank
  • Attracts individual savers to reduce the governments need to borrow
  • Sells premium bonds
• national savings and investments- advantages

  • 100% safe guarantee from the treasury
  • Some products have tax free elements
  • May win big with premium bonds
• national savings and investments- disadvantages

  • Rates often low
  • Bank savings are now tax free
  • May win nothing with premium bonds
• insurance companies- features

  • Protect your precious things for a small monthly premium e.g. houses, cars, loved ones
• insurance companies- advantages

  • A small premium may result in a big pay-out
  • Peace of mind
• insurance companies- disadvantages

  • Could pay for something that you never use
  • Policy excesses may reduce the benefit
• pension companies- features

  • Long term saving plan to fund your retirement
  • Individual scheme
  • Schemes run by employers
• pension companies- advantages

  • Pension savings are tax free
  • Employers often contribute to their in house scheme
• pension companies- disadvantages

  • May die before retirement
  • Pension benefits are subject to tax
• pawnbrokers- features

  • Short term loan subject to interest secured by an asset
• pawnbrokers- advantages

  • Easier to be accepted than a bank loan
  • Terms flexible
  • If you default it doesn’t affect your credit rating
• pawnbrokers- disadvantages

  • If loan not repaid asset will be sold
  • Rates higher than from banks
• payday loans- features

  • Short term loan secured by a post dated cheque
• payday loans- advantages

  • Available quickly, often for unexpected costs
  • Can be for just a few days
• payday loans- disadvantages

  • Very high interest rates
  • Usually for less than £1,000
  • The full cost of the loan isn’t always obvious to the borrower
• types of organisations

  • Bank of England
  • Banks
  • Building societies
  • Credit unions
  • National Savings and investments
  • Insurance companies
  • Pension companies
  • Pawnbrokers
  • Payday loans