A1 - Functions of Money

for January 2024 exam

Utility Bill

usually paid for a service monthly/annually/quarterly such as water, gas, electricity, rates (council tax)

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advantage - paying in advance means less worry

disadvantage - a business may not have sufficient funds to pay bills in advance alongside other bills or utilities such as salaries

Rates

means council tax

Direct Debit

most common method of paying a bill

pre-arranged contract which requires a signature

money leaves at the same time every month, NOT always the same AMOUNT

term is arranged with the provider

cannot be changed by the payee

most preferred for bills owed to large companies

Cheque

advantages - secure payment method

disadvantages - available in 3-5 working days, outdated

Standing Order

ongoing until cancelled

stays the same unless payee changes the amount

Credit Card

money you do not own, usually have 30 days to repay with interest. usually have to be 18+ and credit scored.

* un/authorised overdraft between user and bank
* depends on status eg: employed, student

Credit Rating

* have to be 18
* employed
* regular income

Overdraft Buffer Zone

for example, £50 without charge

ISA (Individual Savings Account)

interest free

has a minimum amount

Bank of England

sets base rate

low base rate benefits the economy

Buildings and Contents Insurance

can be combined or stand alone

business or personal

always mandatory to have buildings insurance

content is what is within the property

Insurance Examples

travel

health

pet

car

building

content

life