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Making payments

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  • 1. 9
  • 2. Cheque: A written instruction to your bank to pay a sum of money to another person. 9
  • 3. Cheque: (continued)There are three parties to a cheque: ◦ drawer — the account holder ◦ drawee — the bank where the account is held ◦ payee — the person being paid the money 9
  • 4.  A cheque contains the following additional information:1. Date 2. Amount in words 3. Amount in figures4. Drawer’s signature 5. Cheque number 6. Account number7. Branch sort code 8. Purpose of payment 9. New balance in account 1 18 2 39 4 5 5 7 6 9
  • 5. Crossing a cheque Crossing a cheque involves drawing two parallel lines across the front 9
  • 6. Advantages: Disadvantages:
  • 7. Plastic Cards:  Banks provide a number of ―plastic‖ cards for their current account holders: ◦ Laser (Debit) Card ◦ ATM Card ◦ Cheque Guarantee Card ◦ Credit Card People use ―plastic‖ to pay for goods and services and to transfer money to other people without using cash. 9
  • 8.  Money can be transferred electronically in the following ways:  Direct Debit A direct debit can be used to make a regular payment where the amount changes each time, e.g. the electricity bill  Standing Order A standing order can be used to make a regular payment where the amount is the same each time, e.g. a regular donation to charity 9
  • 9.  A stopped cheque – A cheque which the drawer informs the bank not to honour A postdated cheque – A cheque that has a date on it sometime in the future A stale cheque – A cheque that is more than 6 months old A blank cheque – A cheque with some of the details missing
  • 10.  A crossed cheque – A cheque with two parallel lines on the face of it An open cheque – A cheque which is not crossed An endorsed cheque – a cheque which is signed on the back by the payee
  • 11.  Payee – the person who receives the cheque Drawer – the person who writes the cheque and from whose account the money will be taken Direct Debit – A method of paying bills where the amount may change Standing Order - A method of paying regular bills of a fixed amount
  • 12.  Money can be transferred electronically in the following ways:  Bank Giro Credit Transfer A bank giro credit transfer is used to make a single payment to another person through the bank, e.g. paying your TV licence  Paypath Paypath is used by employers to transfer the wages of their employees directly into their bank accounts each payday  Bank draft A bank draft is a form of a cheque which a bank draws on itself. You pay the bank and they issue a bank draft made out to the person you want to pay 9
  • 13. •Workbook p54
  • 14. An exchange rate is the quantity of a foreign currency which can be purchased for one’s own currency (eg. One Euro)
  • 15.  Euro → Foreign Currency = Multiply by the Sell Rate Foreign Currency → Euro = Divide by the Buy Rate
  • 16. Peter is going on holidays to Florida. He has saved€1,500 and wants to change this to dollars for hisholiday. He goes to the bank and sees this sign:US Dollars: Bank Sells = 1.45 Banks Buys = 1.55How many dollars can he get for his €1,500?Remember: Euro → Foreign Currency = Multiply bythe Sell Rate €1,500 x 1.45 = $2,175Answer: Peter can get $2,175 in exchange for€1,500
  • 17. Peter is coming home from his holidays and has$100 left. Again he goes to the bank and sees thissign:US Dollars: Bank Sells = 1.45 Banks Buys = 1.55How many Euro can Peter get for his $100?Remember: Foreign Currency → Euro = Divide bythe Buy Rate $100 / 1.55 = €64.52Answer: Peter can get €64.52 in exchange for$100
  • 18.  Foreign Cash - £ $ ¥ Travellers’ cheque Debit Card Credit Card