Bank Accounts Quiz

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Questions and Answers

What is a primary purpose of a current account?

  • To manage business transactions exclusively
  • To facilitate frequent deposits and withdrawals (correct)
  • To earn high interest returns on savings
  • To invest in long-term financial products

Which of the following is a feature of a standard account?

  • Ability to set up direct debits and standing orders (correct)
  • Guaranteed high interest returns
  • Automatic investment options
  • Free insurance services

What is typically included in a packaged premium account?

  • No fees for account maintenance
  • Access to stocks and shares
  • Higher overdraft limits than standard accounts
  • A bundle of additional services such as free insurance (correct)

What does a basic account generally NOT include?

<p>Overdraft facilities (C)</p> Signup and view all the answers

Which factor is NOT a consideration when evaluating whether to switch banks?

<p>The popularity of the bank (A)</p> Signup and view all the answers

What is a disadvantage of maintaining a negative balance in a current account?

<p>High interest rates may apply on negative balances (C)</p> Signup and view all the answers

Why might someone choose a student account?

<p>To minimize fees with special student offers (B)</p> Signup and view all the answers

Which of the following is NOT a feature of a current account?

<p>Direct investment options (B)</p> Signup and view all the answers

What is the primary focus of the activities listed?

<p>Evaluating various account types and their suitability (C)</p> Signup and view all the answers

Which type of account would likely be most suitable for a student at university?

<p>Basic student account with low fees (C)</p> Signup and view all the answers

What aspect of the Payment Protection Insurance (PPI) scandal is examined in the activities?

<p>The reasons behind the mis-selling of PPI (D)</p> Signup and view all the answers

Which of the following best describes the learning outcome of identifying account products?

<p>Recognizing various products for personal use (C)</p> Signup and view all the answers

Who would most likely be affected by the PPI mis-selling scandal?

<p>Individuals who took out loans or credit without understanding PPI (A)</p> Signup and view all the answers

What is an expected outcome of designing the matrix for account types?

<p>Detailing advantages and disadvantages of various accounts (B)</p> Signup and view all the answers

What compensation measures have been discussed in relation to the PPI scandal?

<p>Considerable amounts set aside by certain banks for affected customers (B)</p> Signup and view all the answers

What is a likely disadvantage of an account tailored for a family with a low income and bad credit?

<p>Limited options for credit building over time (B)</p> Signup and view all the answers

What is a primary characteristic of a Basic Account?

<p>Designed for customers with low credit ratings (D)</p> Signup and view all the answers

What is one disadvantage of a Packaged, Premium Account?

<p>May charge extra fees for the range of services (A)</p> Signup and view all the answers

Which account is likely to have the stigma attached to it?

<p>Basic Account (C)</p> Signup and view all the answers

Which advantage is most associated with Standard Accounts?

<p>Provides a wide range of available services (A)</p> Signup and view all the answers

What essential condition might a bank account fulfill for an individual?

<p>Necessary condition for employment (C)</p> Signup and view all the answers

What is a common disadvantage associated with Standard Accounts?

<p>High charges on overdrafts and bounced cheques (A)</p> Signup and view all the answers

Which account type may offer generic benefits rather than tailored services?

<p>Packaged, Premium Account (D)</p> Signup and view all the answers

Flashcards

Current Account

A type of bank account designed for frequent use, like regular deposits and withdrawals.

Standard Account

The most common bank account for individuals with a decent credit history.

Packaged/Premium Account

A bank account that offers standard features combined with additional services like insurance or travel benefits.

Basic Account

A bank account designed for people with limited credit history or potential financial difficulties.

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Overdraft Limit

The amount of money a bank allows you to borrow beyond your account balance.

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Negative Balance Interest

The interest rate charged by a bank when your account balance goes below zero.

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Positive Balance Interest

The interest rate paid by a bank on the positive balance in your account.

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Additional Incentives

Extra incentives offered by banks to attract customers. Examples include cashback rewards, discounts on travel or insurance.

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What is a Student Account?

A bank account designed for students, often with features like tuition fee payments, student loan deposits, and limited overdraft facilities.

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What is a Basic Account?

A basic bank account offered to those with limited credit history, providing only essential services like deposits and withdrawals.

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What is a Standard Account?

A bank account that offers a wider range of services and features, including overdraft facilities, while potentially charging higher fees.

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What is a Packaged/Premium Account?

A bank account that offers a package of services and additional benefits, such as insurance or travel perks, often with higher fees.

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What is an Overdraft Facility?

A bank account feature that allows you to spend more money than you have in your account, up to a specified limit.

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What is Negative Balance Interest?

The interest charged by a bank on the amount you overdraw your account.

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What are Additional Incentives?

The additional benefits and perks offered by a bank account to attract customers, such as cashback rewards, travel discounts, or insurance.

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What are Standard Account Features?

The features offered by a bank account that allow for everyday financial transactions, such as deposits, withdrawals, and payments.

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What is PPI insurance?

A type of insurance that covers financial losses due to unexpected events like illness, unemployment, or disability, often linked to loan repayments.

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How was PPI mis-sold?

PPI was often sold without fully explaining its terms, costs, and benefits. Customers were pressured or misled into believing they needed it, even when they didn't qualify or had alternative cover.

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Who was most affected by the mis-selling?

Those with limited financial literacy, bad credit history, or vulnerable individuals were more susceptible to PPI mis-selling, as they often relied on the advice of salespeople.

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What was the extent of PPI mis-selling?

The PPI scandal involved billions of pounds in mis-sold policies across multiple banks and financial institutions.

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What was the effect of the PPI mis-selling?

Financial hardship for customers due to unnecessary payments, damage to credit history, and loss of trust in financial institutions.

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What compensation arrangements have been set?

Banks and financial institutions have set aside billions of pounds in compensation funds to reimburse customers who were mis-sold PPI.

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What have been the conclusions/recommendations about mis-selling?

Banks and financial institutions need to improve transparency and fairness when selling financial products. Increased regulations and consumer protection measures are important.

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Study Notes

Level 3 BTEC Foundation Diploma Business/Law/Finance Unit 3: Personal and Business Finance

  • This unit focuses on personal and business finance concepts.
  • Learning Aim A covers various topics related to personal accounts.

Break Time

  • Starts at 1:15 PM
  • Ends at 1:35 PM

Ground Rules

  • Mobile phones are not to be used unless instructed by a teacher.
  • Lanyards must be worn at all times.

Learning Outcomes

  • Identify various account products for personal use.
  • Analyze the advantages and disadvantages of different account types.
  • Evaluate and choose the most suitable account type for individual circumstances.

Account Types

  • Evaluate current account suitability.

  • Explore other available account options on the market.

  • Research the features and benefits of differing account types.

  • Analyze advantages and disadvantages of various account types.

  • Account types mentioned include:

    • Student Account
    • Standard Account
    • Packaged/Premium Account
    • Basic Account

Current Accounts

  • Designed for frequent transactions like deposits and withdrawals.
  • Features can include interest rates (positive and negative balances), overdraft limits, charges for unauthorized overdrafts, and additional incentives.

Standard Account

  • Most common account type assuming a good credit rating.
  • Features typically include direct debits, standing orders, cheque books, debit cards, cash deposit/withdrawal, and potentially an overdraft limit.
  • Interest rates depend on the account balance (positive or negative).

Packaged/Premium Account

  • Standard account features plus additional services.
  • Examples include free insurance (home or mobile), breakdown cover, and cash back.

Basic Account

  • Offers limited features compared to a standard account, often suitable for those with low credit ratings.
  • Customers are considered higher risk and do not qualify for credit.
  • Funds can be deposited and cash withdrawals are possible if sufficient funds are available.

Student Account

  • Designed to meet the specific needs of students.
  • Common features include procedures for paying tuition fees and accommodation.
  • Limited overdraft facilities, incentives to join, and payment of student loans are possible.

Advantages and Disadvantages

  • A table is provided for different account types (standard, packaged/premium, basic), but it is incomplete (lacking specifics).

Activity 1

  • Create a matrix on various account types.
  • Include information on each provider, account type, advantages, and disadvantages.

Activity 2

  • Evaluate account options based on personal needs.
  • Prepare findings for class discussion.

Activity 3

  • PPI scandal analysis required.
  • Questions to answer in a report about PPI:
    • Definitions of PPI insurance.
    • Mis-selling methods.
    • Affected groups.
    • PPI mis-selling extent.
    • Consequences of mis-selling.
    • Compensation arrangements.
    • Conclusions and recommendations about mis-selling.

Activity 4

  • Choose a suitable account based on different profiles:
    • Elderly retired couple
    • University student
    • Low-income family with bad credit
    • High-income family who travel
    • Recent graduate starting a job
    • 16-year-old with no banking history.

Activity 5

  • Case study on Gabriella's account selection.
  • Questions to consider for Gabriella's situation:
    • Reasons for a student account.
    • Best student account for her. Justification.
    • Key priorities for a student account.
    • Benefits for banks offering student accounts.

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Level 3 BTEC Foundation Diploma Business/Law/Finance PDF

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