Key Terms - Personal Finance - Unit 3

• Cash


  notes and coins in a wide range of denominations
• Debit card


  Issued by banks with payments for goods and services being deducted directly from a current account
• Credit Card


  issued by financial institutions allowing customers to delay payments for goods and services
• Cheque


  written order to a bank to make specific payment for a specific amount of money from one persons account to another account
• Electronic Transfer


  Payment transferred directly from one bank account to another
• Direct Debit


  Agreement made with a bank to allow a 3rd party to withdraw money from account on a set day to pay for goods and services received e.g electricity bill
• Standing Order


  agreement made with a bank to transfer a fixed sum of money to 3rd party account on a set date on a regual
• pre-paid card


  Money is uploaded onto a card with transactions then being withdrawn to reduce the balance
• contactless card


  card with an embedded chip and antenna that enables consumers to wave their card over a reader at the point of sale for an automatic transaction
• charge card


  Issued by financial institutions allowing customers to delay payments for goods and services for a short period of time; the balance must be paid off in full at each statement date
• store card


  Issued by a retail outlet to allow customers to delay payments for goods and services - similar to a credit card but only for the store(s) specified.
• mobile banking


  The ability to carry out financial transactions using mobile devices such as phones or tablets in 3 working days
• BACS (Bankers Automated clearing service)


  A system that allows the transfer of payments directly from one bank account to another, usually on the same day
• standard current account


  type of account provides full day-to-day banking facilities e.g cheque book, debit card, easy access to your money and an overdraft facility
• Packaged premium current account

  usually has an annual fee or additional charge in return for offering extra incentives. may include offers such as discounted home insurance, no fee overdraft
• basic current account


  offer limited features and would typically be held by a person with no credit history in the UK or a poor credit history
• student current account


  designed to assist young people and students to become prudent with their personal finances. may come with a bonus feature, such as intrest free overdraft facilities
• overdraft


  allows individual to withdraw money from a current account they don't actually have
• personal loan


  allows individual to borrow a set amount of money which is to be repaid in regular installments with interest
• hire purchase


  allows individual to have use of an item immediately but pay for it in regular installments. property only owned by the individual when the final installment has been paid
• mortgage


  long-term loan fund the purchase of assets e.g property which will be repaid over a long period e.g 25 years. in time and receiving a wage
• credit cards


  allows individual to pay for goods or services using a card with a statement issued at the end of each month. the balance can be paid in full without incurring interest, or in smaller amounts with an interest charge
• payday loan


  Short term source of finance to bridge gap between receiving wage
• ISA (individual savings account)


  tax-free way to save or invest
• deposit and savings account


  An account where interest is paid on the balance
• premium bonds


  A government scheme that allows individuals to save up to set amount by buying bonds. The bonds holder does not receive interest on their savings but each bond is placed into regular draw for cash prizes.
• bonds and gilts


  fixed term securities where the individual lends money to companies and the government in return for interest payments
• shares


  Investments in business in return for equity. The shareholder becomes a part-owner of the business.
• pensions


  Long-term savings plans where individuals make regular contributions through their working life. This is then repaid upon retirement, either as a lump sum or regular payments.
• car insurance


  to cover both theft and accidents - there is legal requirements to insure any car that's on the road and this protects the driver, passengers and other road users
• home insurance


  covers the physical building against the events like a fire or flood damage
• contents insurance


  covers the physical items inside the house and when they are used away from home
• life assurance


  Ongoing policy to pay a lump sum upon death
• life insurance


  a policy for a set period of time to pay a lump if you die within that time period
• travel insurance


  Protects individuals or groups while abroad. Cover usually includes illness, loss or theft of property, cancellation and emergencies up to predetermined limits.
• pet insurance


  This protects the owners of pets against some or all of the expenses associated with treating ill or injured pets, i.e. vets' fees.
• health insurance


  covers individuals, families or employees against medical expenses including assessments,treatments and loss of earnings, In the UK, this can pay for private treatment or payment plans for route visits e.g to the dentist
• Bank of England


  UK's central bank with responsibility for maintaining a healthy level of financial stability on the UK
• banks


  Organisation that handles financial transactions and stores money on behalf of its customers Services= holding deposits, making payments when instructed, supplying credit
• building societies


  organisations that handle financial transactions and store the money on behalf of its members. members are part owners of the building society and have a right to vote and receive information on the running of the society.