Financial Institutions

a financial institutions is a company in the business of dealing with financial transactions like depositis, loans, investments and currency exchage.

types of financial insitutions

bank of england

• uks central bank that ensures financial stability of the uk

• sets intrest rates

• prints bank notes

• stores 400,000 gold bars

• doesnt deal with gernaral publc

• ads:protects the financial stability of the uk economy

  lends to banks

  sets intrest rates

• disads: dont lend to public

  high intrest rates making borrowing more expensive

banks

• handles fiancial matters and stores money on behalf of the public

• ads: secure to store money

• pays intrest on saving

• varieties of sevices

• disads: savings only protected to £85,000

• owned by share holders so r designed to make profit

building society

• similar to banks by providing same financial services

• the society is owned by members which means they can set rates to benifit members not share holders

• ads: owned by members

  variety of services

  pay intrest on savings

  secure place to store money

• disads: lacks business drive when compared to banks as they arn’t profit driven

  savings only protected to £85,000

credit unions

• member owned financial coopirative controled thru members and operated on the princibles of helping people, providing members credit at a competitive as well as other financial services

• ads: owned by members

  varieties of service

  additional benifits to communities and charities

• disads: may lock the drive of the commercial banks as they arnt profit driven

• savings protected to £85,000

national saving & investment

• goverment backed organisations that offer secure saving options

• ISAs premium bonds and gilts

• ads: savings r secure

  various ways to spend (premuim bonds)

• disads: variable rates

  lack of high speed presents

  usualy need to notice on withdrawals

insurance companys

• protects people against loss for monthly payments

• ads: protects against unexpected events

  variety of cover

  pay monthly easier to budget

• disads: premuim based on risk high risk high premuim

  owned by shareholders so need to make profit

pension society

• sell pension policies

• usualy invest the money deposited in hopes of growing it for use

• ads: plan for retirement

  match contributions of employer

• tax benafits

• disads: poor investments decisions means poor return on investments

  cant access money until agreed term

pawnbrokers

• loan money to people and secure it against an asset

• if the item isn’t returened they will sell the asset to recoup the cost of the loan

• ads: quick way of getting short term cash

  no intrest

  buy back pawned asset

• disads: amount given for the asset is less than actual value

  asset will be sold if its not payed

pay day loan

• short term high intrest

• ads: quick way to get short term cash

• disads: high intrest

  debt accumilation