Basic Accounts vs Current Accounts Both of these accounts will usually: allow you to deposit money give you a cash card let you set up Direct Debits or standing orders to pay bills allow you to do business at the bank counter let you check your balance and withdraw cash at Post Office branches lets you check your balance and withdraw cash from a cash machine telephone or internet banking facilities. However, current accounts will also offer to: give you debit card give you a cheque book and guarantee card provide an overdraft give interest on your money provide other services, for example sending money abroad or cashing foreign cheques. Also features such as insurance or other secure services. What to look for? Are their cash machines free to use or is there a charge? Is there a branch nearby? What are the interest rates? Do I have to make regular or minimum payments to qualify for this? Will the bank let me you go over the overdraft limit? What are the extra fees I will be charged for this? Do I need an account that can be accessed at a Post Office? What is the set overdraft limit? What is the interest rate on this amount?
Saving Accounts These are very different to both basic and current accounts. A savings account is set up for the express purpose of saving money, and as such the account will usually offer a higher rate of interest on money than a current account, in return for often limiting the account-holder s ability to access the money at short notice. Saving accounts are often referred to as ISA s (Individual Savings Accounts). There are several variations of this, such as FMISA s (Flexible Mortgage Individual Savings Accounts). Access to your account may be: instant you can have the money immediately fixed notice or term (you must give your bank or building society 7, 30, 60 or 90 days notice before you can withdraw your money without charge) for a higher rate of interest by internet only or post only. A saving account is preferable to a basic or current account if you want to set money aside for a purchase or expense (for example a holiday, a car or a deposit on your home) and need the higher interest, but you may need to get at the money reasonably quickly. What to look for? What is the minimum investment needed to open the account? What is the interest rate? How often is this then added to your savings? Can you access your money immediately or do you need to give notice? If so, how much?
Explaining Debit and Credit Cards The Front of a card Most cards will say on them whether they are debit card or credit cards. This chip here is called the SIM like the one in your phone and is used at most tills. Once the SIM is inserted, you will have to then enter This 16-digit number is your card number, and is essential when shopping online or over the phone. All cards will have the cardholder name on them clearly. This is the expiry date of your card. This symbol tells you what sort of card you have. This is a Mastercard, but both Visa and Visa Debit are very common too.
The Back of a card The magnetic strip, used for swipe readers This is the Card Security Code, which is essential when making online or telephone purchases. This security hologram makes it harder to clone a card. The signature strip for you to sign. All cards have small print here: this is often emergency contact numbers or helplines in case the card is lost and needs to be returned to the owner.
Cheque Books Cheques are a form of payment. Very few retailers now accept cheques, however, small businesses and tradesman like plumbers, electricians and gardeners still use cheques It is important to complete the cheque properly. What is wrong with the following? 4 th November 2016 Twenty pounds only 20.00 S. G. Griffin 4 th November 2016 ABC Gas S. G. Griffin
4 th November 2016 ABC Gas Thirty pounds only 20.00 S. G. Griffin 4 th November 2016 ABC Gas Twenty pounds only 20.00
Now practice writing your own cheque Write a cheque with today s date paying 70 to your local council.
Everyday Bank Bart Simpson Springfield Cardiff CF23 5HS Statement of account 1 July to 31 st July Opening Balance 0.00 Type of account Current Money In 950.54 Account number 1059641 Money Out 1178.79 Bank Sort Code 20-64-99 Closing Balance -228.25 Date Description Money out Money in Balance 1 July BACS Manchester City Council 850.00 850.00 1 July DC Wetherspoons pub 8.59 841.41 2 July ATM Cash withdrawal Barclays Main Street, 100.00 741.41 Manchester 2 July SO Nationwide 20.00 721.41 3 July DD O2 15.00 706.41 3 July DD British Gas electricity 30.00 676.41 3 July DD British Gas Gas 40.00 636.41 4 July DD Manchester Council Tax 91.40 545.01 4 July DC Starbucks Main Street 4.35 540.66 5 July DD BT (Broadband and Vision Box) 40.32 500.34 8 July DD United Utilities Water 24.00 476.34 9 July DD Loans Direct 50.00 426.34 10 July ATM Cash withdrawal Lloyds Salford 50.00 376.34 10 July DD Asda 32.66 343.68 11 July DC Starbucks Main Street 4.35 339.33 15 July BACS Railway public house 100.54 439.87 16 July DC Stagecoach Bus 45.00 394.87 18 July DC Starbucks Main Street 4.35 390.52 20 July ATM Cash Withdrawal Barclays Main Street, 50.00 340.52 Manchester 20 July DC TK Maxx 35.95 304.57 20 July DC Marks and Spencer 19.99 284.58 20 July DC Next 24.99 259.59 23 July DC Cineworld 6.00 253.59 23 July SO Thomas Elliott Letting Agents 450.00-196.41 27 July DC Tesco Main Avenue 5.61-202.02 27 July DD TV Licence 12.13-213.15 27 July DD Contents insurance 15.10-228.25
DD Direct debit DC Debit Card SO Standing Order ATM Cash machines CQ Cheque payment BACS Direct payment (normally wages) into your account Bank statement questions From the bank account, answer the following questions: 1. How much money is coming in? 2. How much money is going out? 3. What is the closing balance? 4. How much money in a month is spent on Starbucks? 5. How much money is withdrawn from cash machines? 6. If Bart is consistently overdrawn by the same amount each month, how much will his debt be in 12 months time? 7. Which bills are essential? 8. Where can you stop spending? 9. Why is it important to check your bank account?
Payslips Understanding your payslip Organisations you work for must provide you with a payslip. You should check your payslips and keep them for at least a year. Why is important to check your payslip? To make sure you are being paid correctly. To make sure you are taxed correctly. If you are taxed too much you can claim the difference back. You should contact HMRC if you have any queries. If you are taxed too little, you will need to pay it back eventually. From looking at the payslip ask the following: 1. What you must pay (statutory payments) NI (National Insurance), income tax and any student loan repayments. 2. What is voluntary? Normally a pension. 3. What is the tax code? This tells you how much you can earn without paying any tax at all. Important Tips: P45 When you stop working for an employer you should automatically be given a P45. If you do not receive one then ask for it, you are entitled to it by law and it is really important that you have one. The P45 states all the earnings details from that tax year of that job. You can then give the correct part of the form to your next employer to make sure that you are then not overtaxed or run into problems. If you lose your P45 then you will not be able to get a replacement. P60 A P60 is a statement issued at the end of each tax year (which is in April, not January). It is important a taxpayer does not destroy the P60 forms issued to them, as they are crucial bits of paperwork that cannot be replaced. As an adult, you may be filling in forms that require P60 s for anything up to 20 years of employment. This is why you should keep your P60s permanently safe.
Sample payslip Bart Simpson Springfield Cardiff CF23 5HS NI No BS 35 45 55 C NI Code Tax Year beginning 2016 Tax Code/basis 1100L Period 5 Pay Date 15.08.2016 Pay Method BACS Transfer Payments.pp Deductions.pp Monthly Salary 1250.00 Income Tax National Insurance Pensions 149.42 137.50 120.00 Total Payments 1250.00 Total Deductions 406.92 Net Pay 843.08 Year to Date Totals Gross pay Pension Taxable Pay Tax Paid NI 6250.00 600.00 3735.42 747.10 687.50