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Questions and Answers
What is a 'current account' commonly known as in the USA?
What does 'In the red' signify in banking terms?
What is the function of a 'mortgage loan'?
What happens when a borrower 'defaults on a loan'?
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What is the main difference between a credit card and a debit card as described in the text?
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In the context of loans, what does it mean for interest to 'accrue'?
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What is the difference between arrears and debt based on the text?
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What is the process outlined in Step 8 of the text?
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How is a fixed interest rate loan different from a variable interest rate loan?
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What should you do if you can't make payments on time, according to the text?
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Study Notes
Banking Terminology
- In the USA, a 'current account' is commonly known as a 'checking account'.
Banking Status
- 'In the red' signifies that an account has a negative balance, meaning the account holder has overdraft.
Mortgage Loans
- A 'mortgage loan' is a loan used to purchase a property, with the property itself serving as collateral.
Loan Defaults
- When a borrower 'defaults on a loan', they fail to make scheduled payments, resulting in the lender taking action to recover the loan amount.
Credit and Debit Cards
- The main difference between a credit card and a debit card is that a credit card allows borrowing, while a debit card deducts funds directly from the account holder's balance.
Loan Interest
- When interest 'accrues', it means that the borrower is charged additional interest on the outstanding loan amount, increasing the total amount owed.
Arrears and Debt
- 'Arrears' refers to the unpaid amount of a loan, while 'debt' refers to the total amount owed, including interest and fees.
Loan Repayment
- Step 8 of the text outlines the process of contacting the lender to discuss alternatives if payments cannot be made on time.
Loan Interest Rates
- A fixed interest rate loan has a constant interest rate throughout the loan term, while a variable interest rate loan has an interest rate that may change over time.
Managing Loan Payments
- If you can't make payments on time, you should contact the lender to discuss alternative arrangements to avoid defaulting on the loan.
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Description
Test your knowledge of basic banking terms and account types with this quiz. Explore the definitions of current accounts, savings accounts, business accounts, and overdraft facilities.
