HND个人理财参考答案

1.Credit card

Advantage 3

1.Purchase Power and Ease of Purchase - Credit cards can make it easier to buy things. If you don't like to carry large amounts of cash with you or if a company doesn't accept cash purchases putting purchases on a credit card can make buying things easier.

2.Protection of Purchases - Credit cards may also offer you additional protection if something you have bought is lost, damaged, or stolen.

3.Building a Credit Line - Having a good credit history is often important, not only when applying for credit cards, but also when applying for things such as loans, rental applications, or even some jobs.

Disadvantage 3

1.Blowing Your Budget -- The biggest disadvantage of credit cards is that they encourage people to spend money that they don't have. Most credit cards do not require you to pay off your balance each month, so even if you only have £100, you may be able to spend up to £500 or £1,000 on your credit card.

2.High Interest Rates and Increased Debt -- Credit card companies charge you an enormous amount of interest on each balance that you don't pay off at the end of each month. This is how they make their money and this is how most people in the United States get into debt.

3.Credit Card Fraud - Like cash, sometimes credit cards can be stolen. They may be physically stolen or someone may steal your credit card number and use your card to rack up debts.

How to avoid to pay interest on purchase?

1.Paid-off the outstanding balance in full by the due date which statement every month.

2.Set up a direct debit to clear outstanding balance each month automatically.

2.Non- cash payment

Contactless payment

Contactless is a fast, easy and secure way to pay. The purchaser taps the card reader with their card, waits for a beep and green light and the transaction is completed. From September 2015, the contactless card payment limit is being increased from £20 to £30. Beyond the limit, the customer has to use the chip and pin function to authorize the transaction using their PIN number.

Advantages:

1. Convenience. Tapping to pay is faster and more convenient than most other forms of payment. A contactless card, for instance, can be used without removing it from your wallet.

2. Acceptance. Contactless cards are accepted at far fewer locations or retailers than other payment methods.

Disadvantages:

1. Less implicit. If you have multiple cards in your wallet and you pay without removing them, the winner is random luck. Sometimes, this can cause real issues (such as errors at transit settings).

2. Less secure than chip-and-pin

3.ISA

Definition:The inpidual Saving Account is an account where interest and gains

made on capital is not taxed at source.

Features: 1. available to savers aged 16 or over. 2. ISAs are available to UK residents.

3. ISA was designed to encourage saver to invest in a wide range of saving or investments.

4. With stock and shares in a ISA, pidends are free if tax. Any capital gains on the stocks and shares are also tax fee.

5. The maximum you can save in ISAs is £20,000 (6 April 2018-5 April 2019) tax fee.

6. ISA can be saving accounts, share accounts or a combination of the two.

There are four components within ISA.

1. Cash ISA

2. Stocks and shares ISA

3. Innovative finance ISA

4. Lifetime ISA

How to saving

You can save up to £20000 in one type of account or split the allowance across some or all of the other types.

You can only pay £4000 into your lifetime ISA in a tax free.

4.Personal loans in the UK

1. Loan terms can usually be 1 year to 8 years (or 5 years), and the exact term depends on the amount borrowed.

2. Personal loans are always unsecured.

3. Interest on the loan is charged at a fixed rate for the full term.

4. Personal loans usually available for sums of £1,000 to £50,000 (or £25,000), the maximum amount depends on financial institutions’ decisions and customer’ inpidual circumstances.

5. Personal loan is created by transferring funds into the customer’s current account. Overdraft features

1. An overdraft allows you to borrow a limited amount of money that banks have approved for you through your current account, and you can issue cheques to make payments up to that limit.

2. Banks will only charge you interest and fee if you actually use it. The charge based on the total amount of overdraft on daily basis.

3. Lower interest rates will be charged compare with the borrowing from credit card since the total amount of borrowed may decrease if your salary is paid to your current regularly.

5.Mortgage

Equity release mortgage

Equity release mortgage is the process of paying off one mortgage with proceeds from another mortgage using the same property as security.

Advantage 3

1. The release pf equity that can be used for renovation work or expanding you home.

2. No restrictions on renting the property out if there is no mortgage.

3. The process for application is very quick since this is not the first time application. Disadvantage 2

1. It maximum loan is up to £25,000.

2. You may be switching your short term debts to long term debts.

1.Redundancy insurance policy

Redundancy insurance, also referred to as unemployment protection insurance. It allows you to cover 50%-70% of your GROSS salary up to a maximum of £5000 per month Tax Free.

Features: 1. Benefits are payable monthly usually after 30 days unemployment. 2. Payable until a return to work or the ceasing date. 3. Can be in sole, joint cover or 2 separate names. 4. Often linked accident or sickness insurance plans - although can be taken as separate benefits.

ASU

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