1.8 CONTINUED

1.8 CONTINUED

1. Credit cards are a good way of short term borrowing If balance is repaid every month - less cash required in person.

2. notice accounts are not suitable for emergency funds as the saver will have to pay a penalty if they withdraw without giving notice before the maturity date.

   • these are more useful for long term savings for example for saving to buy a house, holiday or a wedding

3. for borrowers to maintain sustainability they should regularly monitor and keep aware of both the total monthly repayments being taken from their account as well as their borrowing

4. mortgages have lower interest rates due to them having much longer repayment periods which is usually 25 years.

   • lenders can take more risks with mortgages as they are secured on the property. repossession can happen if the monthly repayments are not made.

5. credit cards should not be used to repau debts. when a orrower reaches their credit limit they cannot borrow anymore and interest can increase by a lot. this is a lot higher on credit cards than other borrowing products

6. without appropriate insurance, events such as a car crash or a serious illness or redundancy or a house fire can all have damaging impacts on an individuals finances.

7. payday loan lenders have been accused of encouraging people to take out more and more loands or to roll the debt over to the next month.

   • payday loans are covered by the consumer credit acts of 1974 and 2006.