Key terms from Topic 4: Everyday banking

Annual equivalent rate is the interest that will be earned on the  money in one year and takes into account how often the provider  

pays the interest (for example, monthly or annually), the effect of  

compounding the interest and any fees and charges

• AER

• ATM

Automated teller machine, also known as a cash machine

• ATM

• AER

A current account that allows people to store their money as an

electronic balance and make payments by direct debit, standing

order, prepaid cash card or by withdrawing cash. There is no debit

card, cheque book or overdraft facility on this type of account

• Budget surplus

• Basic account

A sum of money available once all the essential expenditure in a

given period, eg a month, has been made

• Budget surplus

• Basic bank account

A card used to withdraw cash from ATMs or branch counters

• Cash card

• Cheque

A written instruction to the provider (eg the bank or building society)

to pay a specified amount to a specified person or organisation. (The

law relating to cheques is quite complex so this is a simplified

explanation for the purpose of these study materials)

• Cheque

• Current account

A bank or building society account where people can store their

money in the form of an electronic balance and withdraw it to make

payments.

• Current account

• Cheque

A card that can be used to withdraw cash, to make face-to-face

transactions in, for example, shops, and to make payments online or

over the phone

• Debit card

• Direct debit

An electronic payment into an account, for example a salary or

benefit payment.

• True

• False

An electronic payment out of an account. The amount and frequency

of a direct debit payment can vary.

• Direct debit

• Direct credit