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Different ways to pay - Coggle Diagram
Different ways to pay
Debit card
Definition
Allows you to make purchases by card with the money being taken directly from a current account
Advantages
- Can purchase online
- Small risk of overspending
- Widely accepted
Disadvantages
- Not accepted small transaction
- Overdraft
Contactless payment/card
Definition
Card containing atennae allows money to transferred when the card touches a contactless terminal
Advantages
- Quick and easy
- No PIN number needed
- Secured method of payment
Disadvantages
- People can get your card and use it
- Maximum of £45 spend
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Credit card
Definition
Issued by financial institution allowing customers to delay payment for goods and services, pay back once you have received statements
Advantage
- Spend money if you don't have it
- Can use online or store
Disadvantage
- May get into debt
- Interest can change
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Store card
Definition
Allows a customer to buy on credit in a particular store or groups of stores, minimum payment is required each month upon receipt of statment
Advantages
- May reward frequent shoppers discount or coupons
- Can choose how much to pay each month
- Spread cost of spending
Disadvantages
- May encourage debt
- Interest will be charge on balance not paid off at the end of month
- Can open multiple stores; couldn't manage it
Cheque
Definition: A paper transaction giving a bank permission to transfer payment from your account to another account
Advantage
- Widely accepted for face to face
- Postal transaction
- Secured method of payment, only done by payee
Disadvantage
- View as old fashion
- Can use money instantly
- Easy to make error
Standing order
Definition
An agreement made with a bank to transfer a fixed sum of money to a third party account on a set date on regular basis
Advantage
- Same amount paid each time
- Secure method of payment
- Easy to cancel and set up
Disadvantage
- Payments will continue to be made unless it's cancelled
- Money taken regardless of balance leading onto unplanned use of overdraft
Charge card
Definition
Allows for purchases to be paid on a credit card but the total amount is automatically paid directly from a bank account upon receipt of statement each month
Advantages
- Secure method of payment
- Avoid long term debt
Disadvantages
- May incur annual or monthly fees
- Has to be paid in full regardless of funds
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Direct debit
Definition
An agreement made with a bank allowing a third party to withdraw money from an account on a set day, to pay for goods or services received. E.g. mobile phones, customer give permission to seller to take money from customer's bank, water or electric bills
Advantage
- Quick and easy to set up
- Ensure regular payment are not missed
Disadvantage
- If payer made mistake, it's payee's responsible to pay back
- Need to be reset if bank detail changed
- Payer deters how much need to pay each time, hard for payee to manage budget
Pre-paid card
Definition
A cash balance is held on a card which then reduces each time a transaction takes place, e.g. Oyster card or Lunch card
Advantages
- Can only spend up to the amount upload
- Can only be used for specific purpose
- Secure method of payment
Disadvantage
- Can be used by others without permission
- Can be difficult to monitor balance
- May involve fee to get the card