BTEC National Level 3 Business: Unit 3 Personal Finance Revision Knowledge Organiser

Comprehensive vocabulary flashcards covering functions of money, payment methods, current accounts, borrowing, savings, investments, financial institutions, consumer protection, and financial advice.

Functions of money

The four fundamental purposes of money: unit of account, means of exchange, store of value, and legal tender.

Unit of account

One of the four core functions of money, serving as a standard measure to value goods, services, and transactions.

Means of exchange

A primary function of money that enables it to be used as a medium to trade goods and services without bartering.

Store of value

A function of money that allows purchasing power to be saved, preserved, and retrieved in the future.

Legal tender

A legally recognized method of payment that must be accepted to settle a financial debt or obligation.

Life stages

A key factor influencing the role of money, comprising childhood, adolescence, young adult, middle age, and old age, each with distinct features and financial needs.

Interest rate

An external factor influencing the role of money, representing the cost of borrowing versus the reward of saving.

Principles of planning personal finances

Guidelines for managing expenditure to avoid debt, control costs, remain solvent, avoid bankruptcy, fund purchases, set goals, and counter inflation.

Banker's Automated Clearing Services (BACS)

An electronic payment method and clearing service used to transfer funds between bank accounts.

Faster Payment Service (FPS)

An electronic payment system designed to accelerate the transfer of funds between bank accounts.

Clearing House Automated Payment System (CHAPS)

A same-day electronic transfer system used for high-value financial transactions.

Standing order

An instruction to a bank to pay a fixed amount of money regularly from an account to another party.

Direct debit

An authority given to a third party to withdraw varying sums of money directly from an account on agreed dates.

Standard current account

A basic day-to-day banking account offering standard payment services and facilities without bundled extras or monthly fees.

Packaged, premium current account

A current account that offers additional bundled features and services in exchange for a regular fee.

Basic current account

A simplified bank account offering essential cash and payment facilities without credit or overdraft arrangements.

Student current account

A specialized current account tailored to meet the needs of higher education students, typically featuring an interest-free overdraft.

Hire purchase

A personal borrowing product where goods are paid for in installments while in use, with ownership passing only after the final payment.

Individual savings accounts (ISAs)

A tax-advantaged saving and investment product allowing individuals to earn interest or returns exempt from tax.

Premium bonds

A government-backed saving and investment product where interest is awarded through entry into regular prize draws.

Bonds and gilts

Fixed-income investment securities issued by corporations or the government to raise capital in exchange for regular interest payments.

Bank of England

The central bank of the United Kingdom, responsible for setting official interest rates and regulating the financial sector.

Building societies

Mutual financial institutions owned by their members that provide personal banking services, focused primarily on savings and mortgages.

Credit unions

Member-owned financial co-operatives that provide savings and affordable credit facilities to individuals with a common bond.

National savings and investments

A state-owned financial institution that offers government-guaranteed retail savings and investment products.

Pawnbrokers

A financial business providing secured, short-term loans to individuals based on the value of personal property left as collateral.

Payday loans

High-cost, short-term borrowing products designed to provide quick cash advances until the borrower's next paycheck.

Methods of interacting with customers

The communication channels financial institutions use to interact with clients: branch, online banking, telephone banking, mobile banking, and postal banking.

Financial Conduct Authority (FCA)

A regulatory body responsible for overseeing the conduct of financial services firms to protect consumers and maintain market integrity.

Financial Ombudsmen Service (FOS)

An independent service established to investigate and settle individual disputes between consumers and financial businesses.

Financial Services Compensation Scheme (FSCS)

A compensation fund of last resort that compensates consumers in the event an authorized financial firm becomes insolvent.

Office of Fair Trading (OFT)

A former government body responsible for protecting consumer interests and enforcing consumer credit legislation.

Legislation-consumer credit

Statutory legal frameworks and acts regulating the licensing, advertising, and conduct of consumer borrowing and credit agreements.

Citizens Advice

An organization providing free, confidential, and independent information, guidance, and advice on personal finance, legal rights, and debt.

Independent financial advisor (IFA)

A licensed professional who provides unbiased, whole-of-market financial guidance and recommendations tailored to client needs.

Money advice service

A guidance provider established to offer free, unbiased advice and resources on managing personal finances and budgeting.

Individual Voluntary Arrangements (IVAS)

A formal, legally binding agreement between a debtor and their creditors to repay debt over a set period, helping avoid bankruptcy.

Bankruptcy

A formal legal status resulting from an individual's inability to repay outstanding debts, involving debt discharge and asset liquidation.