Introduction• Thousands of years ago people had no system of money as we know it today.• They used the barter system of trading.• Barter is the exchange of a good or service for another good or service: e.g. a bag of rice for a bag of beans.
Standing order Interest- Hire free purchase creditCheque Methods Bank loan of Payment Debit Overdraft card Credit Cash card
Cash Coins and notes are exchanged for goods and services. Cash is normally used for most small purchases, such as food, newspapers and bus tickets.• Carrying a lot of cash around is quite risky as it can be lost or stolen.
Cheques• Cheques are one of the most popular methods for paying large bills. A cheque is an official slip detailing an amount to be paid in exchange for goods and services. The sum of money is taken from the consumer’s current account. The counterfoil is used as a record of how money was spent and is a form of receipt.
Cheques cont.• When you pay by cheque, the supplier will usually ask for your I.D. card. If you have doubts that your chequebook or cheque has been stolen or lost you must inform your branch immediately. Remember: Never write a ‘blank cheque’.
Cards (Plastic money) There are a variety of cards a consumer can apply for to use instead of cash. These cards can mainly be divided into: o Credit cards o Debit cards.
2. Credit Cards There are many different credit cards. Credit cards allow the consumer to buy goods and services without the need for cash (like giving a loan). They allow the holder to borrow to a pre-set limit.
1. Credit Cards cont. Consumers must satisfy certain requirements before being issued with a credit card. Credit cards can be used at the Automated Teller Machines (ATMs) or some points of sales terminals.• When withdrawing cash from ATMs the bank will start charging interest straight away.
2. Debit Cards Debit cards allow you to pay for goods using funds transferred directly from your bank account. The balance in your bank account is automatically checked before each transaction.
2. Debit Cards cont.• The transaction will be effected only if there is enough money in the account.• With a debit card you can withdraw cash from an ATM from funds which you already hold in your account.
Some Useful TipsSign the card and write your I.D. card number immediately Memorise the PIN number Keep card in a secure place
Keep a list or photocopy of all cards Never lend your cards to others Always take ATM receipts with you
Understand all applicable terms and conditions Never give your credit card number over the phone Never respond to e-mails requesting your credit card number
Use secure sites when giving credit card details over the internet Check the amount on the credit card chit before signing it Settle any credit card bills on time
Hire Purchase Hire purchase is used to buy expensive items which a person cannot afford to pay outright: e.g. a car A down payment is usually paid and the balance is paid over several months (monthly instalments).
Hire Purchase cont. There could be an additional charge (interest) for this service. The finance company owns the item until payments have been completed If you fail to keep up your payments, the lender may reclaim the good.
Standing Order A Standing Order is an instruction to your bank to pay a certain amount of money, regularly, on a specific date, to a certain person or company. Debts are paid directly from your account by your bank.
Standing Order cont. Standing orders can be used to pay rent, hire purchase instalments, insurances etc. This process saves you time. It also saves you the trouble of remembering when the amount has to be paid.
Interest-free credit A number of large stores offer interest-free credit on items bought. Goods purchased are paid over several months. No interest is paid on the money owed, unless consumers do not pay within the agreed term.
Bank Loan There are various loans that banks offer, such as home loans, computer loans, car loans, flexi-credit etc. A bank loan is granted to consumers who have made special arrangements with the bank. Monthly repayments are made over a stated period of time.• Interest is charged on the balance of the money owed and depending on the type of loan taken.
Overdraft This is another service offered by the bank. Consumers can take out more money than they have in their account, up to an agreed amount. Interest is usually payable on money overdrawn. Sometimes, banks will agree a modest overdraft limit on which no interest is payable. Used mostly to avoid unnecessary debt because of short-term problems: e.g. unexpected medical expenses.
What we spoke about todayCashChequesCredit cardsDebit cardsHire purchaseStanding orderInterest-free creditBank loanOverdraft