UNIT 4 Banking, Saving and Borrowing


Factor Safety


Explanation


Is the money safe? Most people save with a financial institution (bank, building society, An Post, credit union) where their money is guaranteed by the Irish Government. This means that if the financial institution where to get into financial difficulty, the Irish Government guarantees that the consumer will get €100,000 of their money back.


Interest Taxation


How much interest will the consumer earn on their savings? We will look at interest on savings in more detail later.


Deposit Interest Retention Tax (DIRT) is a tax which must be paid on the interest earned on savings in some financial institutions. Some state-sponsored saving accounts offer tax-free interest.


Convenience


It is important to consider how much access the consumer will have to their money. Some savings accounts are not accessible for long periods of time and a charge may be applied if the consumer withdraws the money early.


Online access Most financial institutions have online features which means accounts can be accessed 24 hours, seven days a week, 365 days of the year.


Investment Opportunities and Pension Funds


Investing: Putting your money/savings into a product or scheme that should make you a profit (income).


Pensions: The household or individual pays into a fund (similar to a savings account) during their working life and then claims the money back when they choose to retire.


Think IT!


• If you had some money set aside after all your bills were paid, would you invest your money or would you save in a financial institution?


EXAM PREPARATION! P. 45


State ‘savings’. Explain it using an example. Apply it to another unit. Go to page 45 in the activity book.


Would you rather save in a piggy bank or a financial institution? Why?


P. 44


Go to page 44 in the activity book to practise more questions on savings.


Examination Tip


Remember to always state your point and explain it.


69


STOP! WRITE IT!


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