topic 3 libf

We do not always only spend all of our money. We can store what is left over, and there are different ways to do this.

An obvious place to store money is where we live. Where might be the safest place to hide money in a house - under the bed, in a locked box, under the floorboards. There are problems with storing money in these sorts of places unless it is small change. Money left in a house can be forgotten,mistakenly thrown away, or stolen by burglars. A locked box, for example, is no problem for a burgular. They can steal the box and find a way to open it later.

We might also think about keeping our money with us at all times:

- in a jacket pocket

- in a purse, bag or wallet

We all need to carry some cash; it helps us to pay for everyday items. But carrying lots of money can make us feel unsafe. What if we leave our jacket or bag somewhere while it is full of money?

A safe way to store your money is to ask a bank, building society or credit union to look after it. These organisations can all store money for you, after you open an 'account' with them. The money is stored as an electronic balance.

BANKS - a bank looks after you spare cash, but uases these money 'deposits' to lend to people who want loans. Most banks have 'branches' across the country, where people can use their services. Others are online only. A person who takes out a loan has to pay the bank 'interest' on what they 'borrowed'. They pay back more than they borrowed, and so the bank makes money (or 'profit').

BULDING SOCIETIES - A building society, like as bank, takes deposits from savers and lend money to borrowers. But building societies share their profits with account holders.

CREDIT UNIONS - Share their profits, and they are run by members. Members of credit unions all share a 'common bond', such as working for the same company.

While borrowers pay interest, savers earn interest on the money they store. Banks, building societies and credit unions can afford to pay interest on savers' accounts because of their profits from loans.

When you open an account, you become a customer of the orginisation.

A savings account lets your money grow by earning interest.

A current account is for storing and managing the money we use everyday

Because banks, building societies and credit unions store our money electronically, it is much harder for the money to be lost or stolen. If they go out of business your money is still safe. The Financial Compensation Scheme (FSCS) covers people's money held in an accountb up to  specific account.

A current account lets us store and manage the money we use every day.

You can:

- take money you need as cash

- pay in more moey when you want

- set up automatic payments for regular bills

When money is paid in, this amount is a credit. When money is paid out, this amount is a debit.

When you open a bank account, it has:

- a sort code, which identifies the bank and the branch where you opened the account

- an account number, which is eight digits and unique to you

Every account number is different. Everything to do with your account has your number on it.

Debit cards are plastic cards used to make payments out of your account. You can use a debit card in shops and on the internet to buy items and services. Most cards have 'chip and PIN', a type of security to keep your money safe. A PIN is your Personal Identififcation Number: four digits that you chose and tell nobody else. To buy something with your card, you put it in the shop's card reader machine. The machine reads the infomation on the card's chip, including your account number. You enter your unique PIN, then the card reader tells your bank to pay for the item for your account. Chip and PIN means that if someone else tried to use your card, they would not be able to without knowing the PIN. With contactless cards, a person only needs to touch the card’s contactless symbol on a card reader to pay for items up to a low limit. This makes a payment simpler for smaller items, as the customer is not always asked for their PIN. Do contactless payments mean less security?

To buy online, you need to enter many different numbers from the debit card. This includes a three digit security number on the signature ***** on the back of the card. You may also be asked to enter a chosen memorable word or didgits from your PIN, but never the full PIN.

Automatic teller machine (ATM)

An ATM lets us withdraw money frow our account when we need it. ATMs are found in bank branches, outside of banks and in some shops.We insert a debit card and enter our PIN to prove the accpunt is ours, then choose how much money to take out. Some ATMs also let us deposit (ie pay in) cheques, which are written instructions to pay money from one account to another. In a branch we can go to our bank, talk to the cashier at the counter and use our card to pay in and withdraw money. Lots of banks also have deposit machine, to pay on cash or cheques without a cashier.

Lots of payments that we need to make will be redular. Bills for electricity may be monthly. Water bills might be every three or six months. A 'direct debit' is an instruction to your bank to let a company collect money from your current account. The amount debited can change. A 'direct debit' is an instruction to your bank to ley a cmpany collect money from your current account. The direct debit guarantee means that if your bank, or the person you are paying, debits too much money by mistake, you can report it and get your money back straight away. A standing order is like a direct debit, but the amount paid per month is always the same. If you brought a magazine subscription for £5 a month, you might set up a standing order. Most money is now paid and recieved electronically, but paper cheques are still useful when payments can't be made by debit card. Some shops and traders do not have card readers.

A bank statement lists:

- all the debits out of your account (money you withdraw, payments for bills and items)

- all the credits into your account (money you pay in, earnings from employment).

Witrh internet banking, you can check your satment at any time. S.atements can also be sent to you on paper. When you use an ATM, you can also get a mini statement tnhat shows only the last few transactions. Staments help us keep track of the money in our account. We can see when we are low on money, and check that payments are being debited and credited as expected. Checking your statement gives you peace of mind. If you dont recognise any of the payments tin or out of your acoount, you must tell the bank.