Unit 3.2. Money and banking

Vocabulary: words concerning money and banking INTRODUCTORY READING

41. Read the text and find out the meaning of the target words (in bold

type).

A. Personal Finance

Sometimes in a shop they ask you. “How do you pay?” You can answer: “Cash” or “By cheque (US check)”, or “By credit card”. Many people open a bank account that may help to manage their personal finance. There are two main types of accounts: a current account (the one where you pay in your salary and then withdraw money if you need to pay your everyday bills) and a savings account (where you deposit any extra money that you have and only take your money out when you want to spend it on something special). A savings account should pay you interest. Most banks give you a different rate of interest depending on how much you are saving, and how long you have the money on the account. The bank sends you a regular bank statement telling you how much money is on your account.

Your bank might give you a cheque book, which allows you to write cheques to pay for goods and services. You’ll probably also have a bank card which allows you to withdraw cash from an automatic cash machine/cash dispenser/”hole in the wall” machine (US ATM (automatic teller machine) and to pay for goods in shops. You get a secret pin number (personal identification number) that you use when you withdraw cash.

If you receive a cheque and want to convert it into cash, you can cash the cheque. Some companies can also pay money into your account via a direct bank transfer. People traditionally use banks for a range of services (bank officers and tellers will readily tell you all about these services). As well as an overdraft facility (withdrawal of money in excess of the credit balance), people also get a mortgage (loan to buy a house), personal loans, and insurance from their banks. If you have an overdraft, you end up paying a lot of interest (then you are said to be in the red as opposed to in the black/in credit that means “without debt”). Banks now offer telephone banking and internet banking. This means that you can manage your finances without going to the local branch/ office of your bank.

While shopping, if you are in cash, you usually pay for it outright, though sometimes you may buy on credit. It happens when you are short of money or out of cash. Certainly you may borrow money from somebody (that is

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somebody may lend/spare you money), though now banks offer you a credit card allowing you to withdraw a certain sum of money and to pay it in later. Unfortunately, during the financial or economic crisis, banks stop lending to other banks, then stop lending to their customers, which means a shortage of credit and no more cheap credit. In other words, it is a credit crunch (when borrowing money (from banks) becomes harder to get and more expensive).

B. Public Finance

The government collects money from citizens through taxes: income tax (collected on wages and salaries); inheritance tax (collected on what people inherit from others). VAT (value added tax) is a tax paid on most goods and services when they are bought. Companies pay corporation tax on their profits. Customs or excise duties have to be paid on goods imported from other countries.

If a person pays too much tax, he/she should be given some money back, a tax rebate. The government also sometimes pays out money to people in need, for example, unemployment benefits - also known as the dole (money received from the state while out of work), disability allowances (money the government awards monthly for handicapped people who cannot find work) and student grants (to help them pay for studying). The people who receive this money are said to draw a pension or to be on the dole or on social security.

Every country has its own special currency. Every day the rates of exchange are published in Currency Exchange and you can discover, for example, how many hryvnias there are currently to the dollar or to the pound sterling. Cash is in the form of coins (pieces of metal usually disc-shaped bearing lettering, designs and numbers showing their values) or paper bills/banknotes (notes issued by central or national bank serving as money). Nowadays cheques and credit cards are being used increasingly and may soon replace coins and bills as they are more convenient and safe.

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