Unit 3 Personal & Business Finance Mr. Barry Year 12 Business BTEC

AO2 Mr. Barry Year 12 Business BTEC

Cash Cash is usually the cheapest way to pay because you know exactly how much you have to hand over. However, accessing cash can be expensive. Your bank may charge a withdrawal fee at their branches or ATM’s, and it can be even more expensive if you use another bank's ATM. Mr. Barry Year 12 Business BTEC

Debit vs. Credit cards Debit cards Like an ATM card for immediate withdrawals of cash Like a check when buying an item. The money used to pay for the transaction is usually deducted from your account within a day or two Advantages Easy to obtain Convenient Safe Readily accepted Disadvantages No grace period Less protection Fees Book balancing difficult Mr. Barry Year 12 Business BTEC

Debit vs. Credit cards Credit cards Allows you to borrow money to pay for goods and services. There will be a limit to how much you can borrow called your credit limit. At the end of each month you can either pay off the full amount you owe or pay an agreed amount Advantages Instant cash Convenience Record keeping Low-cost loans essentially Disadvantages No grace period Less protection Fees Book balancing difficult Mr. Barry Year 12 Business BTEC

Other types of cards Pre-paid cards Contactless cards Store cards Charge cards Mr. Barry Year 12 Business BTEC

Cheque To be able to make a payment by cheque a business must have a current bank account and be issued with a cheque book. A cheque is an instruction to a bank to take money out of the drawer’s account and put it into the payee’s account. Advantages Banks will guarantee a cheque up to a certain amount via a cheque guarantee card. A cheque takes approximately 5 working days to clear Disadvantages Business does not receive the money immediately Cheque could “bounce” Some banks charge money for cheques Mr. Barry Year 12 Business BTEC

Credit transfer Credit transfer allows money to be moved directly from one bank account to another. Electronic transfer of this kind is used by businesses in different ways: Many businesses pay their employees each week or month by credit transfer (BACS) Increasing numbers of businesses pay their suppliers using credit transfer (FPS & CHAPS) Mr. Barry Year 12 Business BTEC

Additional costs if sending money from country to country Disadvantages Additional costs if sending money from country to country Dependent on technology and in particular internet access Advantages Cheaper - The cost savings are numerous especially local credit transfers (normally free) Faster - money can be sent in real time Global - transfer between countries easily Mr. Barry Year 12 Business BTEC

Direct Debit You instruct the bank to allow the company or organisation who presents the direct debit to say how much money will be taken from your account and when The payment is on a fixed day usually but the amount varies from month to month e.g. electricity bill (depending on how much you use) Mr. Barry Year 12 Business BTEC

Advantages and Disadvantages Mr. Barry Year 12 Business BTEC

Standing order Is an instruction to a bank to pay an agreed amount of money (Fixed) to another bank account/company/person on a particular date or time. The standing order will normally pay out the same amount of money on a regular basis, weekly, monthly or annually e.g. Insurance premium, rent Mr. Barry Year 12 Business BTEC

Advantages and Disadvantages Mr. Barry Year 12 Business BTEC

Mobile Banking Mobile banking is a service provided by a bank or other financial institution that allows its customers to conduct a range of financial transactions remotely using a mobile device such as a mobile phone or tablet, and using software, usually called an app, provided by the financial institution for the purpose. Mr. Barry Year 12 Business BTEC

Advantages and Disadvantages Anytime Banking Mobile Banking is Free Various banking services provided e.g. balance check, payments etc. Secure Banking Disadvantages Specific software only on certain phones e.g. IPhone, Samsung etc. Not totally immune to all Virus or Trojans Phishing or “Smishing” can be dangerous and lead to security concerns Mr. Barry Year 12 Business BTEC