BTEC Level 3 Unit 3: Personal and Business Finance Vocabulary

Unit of account

A function of money that allows us to place a monetary value on goods and services.

Means of exchange

A function of money that allows trade, enabling businesses and customers to buy and sell goods and services.

Store of value

A function of money that allows it to be saved and used in the future because it retains its value.

Legal tender

A legally recognised form of payment that is widely accepted for completing financial transactions.

Interest rate

The proportion of an amount borrowed or saved that is charged or paid as interest.

Debt

Money that is owed by one party to another.

Credit rating

A score assigned to individuals estimating how likely they are to repay debts based on their financial history and past actions.

Bankrupt

A legal state in which an individual or organisation formally declares an inability to repay outstanding debts.

Solvent

The financial ability of an individual or business to meet day-to-day expenditure and repay debts as they fall due.

Cash

Notes and coins in a wide range of denominations used as a physical form of payment.

Debit card

A payment card issued by banks where funds for goods and services are deducted directly from the holder's current account.

Credit card

A card issued by financial institutions that allows customers to delay payments for goods and services up to a set limit, with interest charged on unpaid monthly balances.