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Topic 4 - everyday banking, 4.1 Choosing a current account, 4.2 Different…
Topic 4 - everyday banking
Most adults use current accounts for their everyday needs such as receiving payments. Current accounts are designed for people aged 11+ and others are only available for over 18 as they include overdrafts. People choose a current account to match everyday banking needs. Some are free but others have a fee due to extra services. Available from banks and building societies. Accounts offer regular statements online or paper to help monitor transactions.
4.2.1 Basic bank accounts
- suit people who wish to avoid borrowing. For example, people living on benefits or low income. Operates free of charge. People may choose to operate using pre-paid cards which are loaded with funds or cash cards. most offer direct debits or standing orders to pay bills.
4.2.2 youth accounts
- available for people under the age of 18. do not offer overdraft. Offers a range of services like mobile banking, direct debits, however, this depends on the account and age of intended account holders.
4.2.3 standard current accounts
- offer full range of current account facilities. Usually free of charge unless account holder uses the overdraft facilities or requests services that infer a charge.
4.2.4 student and graduate accounts
- variations on the standard account tailored to the needs of students in higher education an recent graduates. Low-interest or no interest overdrafts facilities.
4.2.5 interest paid when in credit
- some current accounts may pay interest on credit balances. conditions attached like minimum monthly amount, keep account in credit. Interest is paid on balances between certain minimum and maximum amounts. may be fee for holding account.
4.4.6 joint accounts
- held by two or more people. Suit people who share finances such as civil partnerships and people sharing a rented home. not suitable for people with different priorities or attitudes to managing money.
4.4.7 packaged accounts
- offers account holders extra benefits for a monthly fee. benefits may include phone insurance, travel insurance. account fee can vary. Suitable if cost of benefits they will use outweigh the annual account fee.
4.4.8 premier accounts
- designed for wealthy customers ad offer a range of additional services, such as a personal banker. Have to have certain level of income.
Before anyone opens a new account, they must supply the provider with proof of identity and address. Required to prevent money laundering. Providers who do not follow face hefty fines. Providers need separate proof of identity and address so one document cannot be used to prove both. Photographic identification documents such as passports and uk drivers license must be current (in date). If applied online they may be asked to send documents by post, show to local branch, upload copies online.
accepted for proof - Gas, electricity, water or phone bill dated in the last 3 months. Driving license issued in the uk. Current passport, employers id card if employer is known to provider. pension or other social security book. medical card. HMRC document. insurance certificate issued in last 12 months. mail order statement from last 3 months.
People who are on benefits, young or who do not pay bills find it difficult to prove identity. People on benefits might use entitlement letter issued by the department for work and pensions. Young people can use birth certificates but would also need a conformation letter from their school or employer stating their name, address and details of educational or employment status. Providers can refuse an application to open an account. This could happen if the provider thinks the applicant would not be a profitable customer.
It is important that people check their current accounts to ensure that they have sufficient money to pay transactions that are due. Statements usually provided once a month. statements often use abbreviations but provider usually explains codes on the statement. Cheques will usually appear as the number on the cheque. its therefore important that people write details of the payee on their checkbooks so they know where they money has been paid.
Providers offer free service for switching between accounts at different providers. Offers free switching process between accounts at one provider, for example switching from student current account to graduate account. People who want to close account can do so at any time and at no cost, although must pay any fees or debt. People would need to return cheque book when they close account. Sometimes a provider will close a current account, for example a customer no longer meets minimum deposit criteria but provider must give at least 2 months notice
4.1 Choosing a current account
4.2 Different types of current accounts
4.3 Opening an account
4.4 monitoring transactions
4.5 Switching and closing accounts