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Teenagers and Students Essay

Words: 4885, Paragraphs: 289, Pages: 17

Paper type: Essay

Parent topic:

People in this group are young children that are still at compulsory education which means they will not need any big loans from bank to pay off any expenses e.g. University fees, although their parents might want to set up a savings account for them for when they grow up. Their parents and guardians will also support them so they should be responsible for any of their financial needs.

Teenagers and Students (17-22)

Teenagers and students from the age of 17 to 22 are quite different from the school age youth. This is because they are no longer at compulsory education and their financial needs have increased so their parents or guardians may support them less financially, because they will be expected to get a job. This means they will need to open a bank account so that when they do get in to the world of work their salary can be paid directly to the account. There are lots of financial services available to teenagers and students e.g. credit cards, but they might not be open to all of the major credit card companies e.g. (Master card, Visa, American express) because they do not have any credit history so they will need to start off with a student credit card.

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Some people in this group will be finishing 6th form / college and be looking to go University and take their education to a next level but this in not cheap so they may need a bank loan to pay for the University fees.

Post-education / pre-families (23-30)

People in this group are young adults that have just finished university and looking to start a family. So this means that their financial needs will be quite great. This is because people in this group will be paying off student loans for their university fees. They might also want to get a mortgage to buy a house just to start off a family. The parents may perhaps open up a bank account to start saving for their children’s future university fees.

Established families (40-50)

Established families will be still paying off their mortgages and other financial debts.

Parents in this stage will still be at work to keep on supporting their family financially. Their kids will be close to the time of leaving their house so there parents will be saving money for their kids university fees, if they decide to go on to further education.

In addition they might also want to start thinking about starting life insurance

Mature household (50-60)

People in the mature household sector are at the stage of their life where there children will be moving out of the house and going on to further education at university, this means that the parents may be saving for their children’s university fees. At this time of their life they should have paid off or be close to paying off their mortgages and financial debts, but this all depends on how high their income is.

Parents in this life stage will be thinking about life insurance so they will need to pay money in to their life insurance.

Retired pensioners (60+)

At this stage of their life they should have paid off their mortgages and other financial services. Pensioners are at a stage in their life where they do not have any big financial responsibilities. They will only be paying for personal needs E.g. clothes and food. This is because at this time of their life their children will be definitely moved out of the house.

Pensioners are being supported financial by the government.

Task 3

Introduction

In task 3 I have been asked to design and create a fact sheet that explains three different banking services available to two people at different life stages, the people I am going to choose are Students and young families.

Bank Services available for Students from Royal bank of Scotland and Barclays Bank

Graduate current account

A current account is used to hold funds for an individual. The benefit of having a current account is that it is an easy way of adding interest to the money that is in the account.

Students will need a current account for many reasons, like salaries and benefits can be paid in and paying bills can be made a lot easier. This is because money can automatically put in and the bill will be automatically paid via direct debit. The account will also give interest on the balance will help their money grow.

The graduate royalties account is available for 3 years and comes with an interest free overdraft up �2000. An overdraft is a service that enables the account holder to withdraw over and above what they actually have in the account. Overdrafts are only available to people over the age of 18. This service will be appropriate for teenagers because it is flexibility on those occasions when you might need to spend before your money is paid in. This is also a preparation for teenagers to handle loans and credit cards because it is the banks money they are handling on a small scale.

Student Credit from The royal Bank of Scotland

A credit card allows customers to purchase goods on credit. This means that the customer will not have to pay for the good at the time of the transaction. The banks loans the customer money by a credit card. This loan is interest free for a short period time (after which the APR is usually quite high).

The student Credit Card is designed for student life. It is a big breakthrough for students when they need all their essential needs. Food, clothes and books. When you add up all the expenses of student living it comes at a big price. On the student credit card there is up to 56 days interest free credit and this should come as good news (if the customer pays the balance in full and one time and have paid the previous month’s balance in full and on time) If not the interest rates will apply.

The card is very flexible because it can be managed online from a computer or MAC to check balances etc.

Graduate loan from Barclays Bank

A loan is when a bank lends a customer money for a long term period. Interest rates vary depending on the sum of money taken out and the time taken to pay it back

The graduate loan from Barclays bank is designed for students at university that are reaching their peek at university and getting ready to graduate. At this point in their life they are not really financial blessed so the graduate loan will help the individual settle down in their new life.

The customer can borrow up �10,000 and can apply for repayment terms up to 60 months so this is really good and flexible for the individual. Fixed interest rates so monthly repayments never change.

Loan Amount

Representative APR

Repayment Term*

Monthly Repayment

Total Payable

�3,000

8.4%

60 months

�62.38

�3,742.80

�5,000

8.4%

60 months

�103.97

�6,238.20

�10,000

8.4%

60 months

�207.93

�12,475.80

Bank Services available for Young Families at HSBC

First time buyer mortgage from Barclays bank

A mortgage is the transfer of an interest in property (or in law the equivalent – a charge) to a lender as a security for a debt – usually a loan of money. While a mortgage in itself is not a debt, it is lender’s security for a debt. It is a transfer of an interest in land (or the equivalent), from the owner to the mortgage lender, on the condition that this interest will be returned to the owner of the real estate when the terms of the mortgage have been satisfied or performed. In other words, the mortgage is a security for the loan that the lender makes to the borrower.

The first time buyer mortgage from Barclays bank is designed for people who are looking to buy their first home. So the first time buyer mortgage is designed to make this easy for the customer.

There is a 2 year fixed rate mortgage so the customer can budget better at the start of their mortgage.

Mortgage

Interest rate

Application

fee

What can I borrow?

Early Repayment Charge

2-year fixed rate

6.49% until 31/01/2010, then for the remaining term BBBR + 0.95% currently 6.45%. The overall cost for comparison is 6.8% APR

�995

Up to 95% of the value of your home

3% of the balance repaid until 31/01/2010

2-year fixed rate

6.79% until 31/01/2010, then for the remaining term BBBR + 0.95% currently 6.45%. The overall cost for comparison is 6.8% APR

None

Up to 95% of the value of your home

3% of the balance repaid until 31/01/2010

BBBR = Barclays Bank Base Rate.

Homeowner loan from Barclays bank

The homeowner loan is simply made for people that own a home and need to borrow between �5000 and �100,000. The payments can be paid over 25 years and the monthly outgoings could be reduced by 50% this is achieved by spreading your new loan over a longer term. By doing this, your overall interest payments will increase.

Platinum Credit Card from the royal bank of Scotland

The platinum credit card from the royal bank of Scotland is designed for people that are over 25 and earn more than �25,000 a year. This is clear the key charteristcs of an individual in the young families life stage. The customer can get 0% interest for 13 months from when they open their account and also pay 0% interest on balance transfers.

Summary Box

The information contained in this table summarises key product features and is not intended to replace any terms and conditions.

APR

Typical 13.9% APR (variable)

Other Interest Rates

Introductory Rate

Monthly Rate

Annual Rate

Simple

Effective

Purchases

0% for 3 months

1.094%

13.128% p.a.

13.947% p.a.

Balance Transfers

0% for 13 months

1.094%

13.128% p.a.

13.947% p.a.

Cash Advances

N/A

1.873%

22.476% p.a.

24.942% p.a.

Money Transfers

N/A

1.094%

13.128% p.a.

13.947% p.a.

Interest Free Period

Maximum 56 days for purchases if you pay your balance in full and on time, and have paid the previous month’s balance in full and on time – no interest free period on cash advances or money transfers. Interest free period on balance transfers only applies to the introductory period.

Interest Charging Information

The periods over which interest is charged are as follows:

From

Until

Purchases

transaction date

repaid in full

Balance transfers

transaction date

repaid in full

Cash advances

transaction date

repaid in full

Money transfers

date debited to your account

repaid in full

Allocation of Payments

We will apply payments we receive to your account in the following order:

Interest on special offers

Other interest, any fee and charges

Special offers

Purchases and balance transfers

Cash advances and money transfers

See section 2(D) (b) of your Credit Card Agreement for full details.

Minimum repayment

Greater of 2.25% of your balance (rounded down to the nearest pound) or �5 each month. Please note: we do not recommend that you only ever make your minimum payment.

Amount of credit

Minimum initial credit limit is �300 and maximum is �20,000. All other credit limits (including the maximum available) are subject to status.

Fees

No Annual Fee.

Charges

Cash advances (except gambling transactions) subject to a handling fee of 2.5% with a minimum of �2.50; Balance transfers subject to a fee of 2.5% (min �5) during the first three months from account opening unless you qualify for exemption from that fee or are notified of a different fee under the terms of a special offer we make in connection with your application; Foreign exchange transactions subject to conversion fee of 2.75% (including purchase of foreign currency and travellers’ cheques); Copies of statements are subject to a fee of �3.

Default charges

Late payment and over limit fees are �12; administration fee of �10 to process dishonoured cheque or direct debit; administration fee of �12 to return unpaid promotional cheque to prevent you going over your limit.

This is the rates and fees from the platinum credit card from the rbs (http://www.rbs.co.uk/personal/credit-cards/g1/platinum.ashx#tabs=section2)

Task 4

Introduction:

In task 4 I have been asked to explain the distinctive features of two selected retail banking services that render them suitable for two contrasting customers.

7.9% APR typical on Barclays bank personal loan.

Annual percentage rate (APR) is the simplified counterpart to the effective interest rate the borrower will pay on a loan. In many countries and jurisdictions, lenders (such as banks) are required to disclose the “cost” of borrowing in some standardized way as a form of consumer protection. APR is intended to make it easier to compare lenders and loan options. The APR is likely to differ from the “note rate” or “headline rate” advertised by the lender, due to the addition of other fees that may need to be included in the APR. However the APR can be found simply by asking the lender, or reading the section about APR in your contract.

Typical: The typical part of the annual percentage rate means that the percentage rate may not be the same as the advertisements. The changes are made due to the position of the applicant, depending on how much dept they are in, the level of income they are having etc. People in all life stages will be looking for the lowest Annual percentage rate.

5.25% AER on e saving reward from Barclays bank.

Annual Equivalent Rate – is a notional rate that’s generally quoted on interest paid on savings and investments. It purports to demonstrate what interest return would be if the interest was compounded and paid annually instead of monthly (or any other period).

If an account pays interest more than once a year, say, for example, monthly or quarterly, then the AER is calculated by adding each interest payment to the deposit and then calculating the next interest payment, compounding the interest. Thus, on accounts where interest is paid quarterly, the AER will be slightly higher than the quoted gross rate because of the compound interest earned on the interest paid during the year[T1].

Task 5

Introduction:

In task 5 I have been asked to describe two retail banking providers that might be considered appropriate to the likely financial needs of two contrasting customers. I will be explaining for is post education / pre families and established families. I will use Barclays bank and the post office

Barclays bank will be appropriate for a senior student in university finishing their degree and preparing to have a family. This is because they will be looking for a retail bank to offer them a basic current account to enable them to manage their bills and other finances. People in this life stage will not want to focus on saving or investing although they might want to leave some money aside.

Barclays also provides saving products. So if a senior student wants to invest or save large amounts they have a wide range of saving facilities to choose from such as long term savings plans or short term saving plans. This can be managed via online banking so it will make it very easy and save time for the customer.

Barclays offers insurance products for all kind of possessions. Such as life, care, home and travel. This will be appropriate for someone in this life stage because they will have lots of important things that will need to be insured.

Post office will be appropriate for people in the established family life stage this is because it is more about saving and investments. This will be good because it will help them save for the future whether it is for their children or just for the future.

The post office provides the instant saver service, witch has a great rate of 3.75% AER. There is great access to their service because they have over 13000 branches across the uk. Plus over 60000 ATM’s across the uk. In addition the account can be managed via online banking. The instant saver offers a double interest guarantee.

The first guarantee is to pass on any rise in the bank of England base for 2 years.

The second guarantee is that the customers interest rate will never be more that 1% below the bank of England base rate for the life of the account.

All interest is paid in annually.

The post office also provides a child trust fund. This will be very suitable for people in the established life stage because their life will be comfortable and established so the will be in a good position to want to save for the future and for their children.

The child trust fund is a stake holder account. Which means it has strict standards that must be met by the government, and one of these standards is that some of the money must be invested in shares.

Task 6

Introduction

In this task I have been asked to describe three savings products which will be considered appropriate to the financial needs of two contrasting customers at a given life stage and the customers that I am going to do are people in mature house holds and young families.

Savings Builder from Barclays bank

The savings builder is for people who have at least �10,000 to save, and wants a great rate of interest with easy access to their account via the Internet and telephone. These will be key characteristics of an adult in a mature household. Interest is calculated on the daily statement balance of the account and is payable monthly on the first working day of the month.

The rates of interest depend on the account balance and whether any withdrawals have been made from the account in the previous calendar month. Where no withdrawals have been made interest is calculated at the higher range of rates applicable to the account balance. On the other hand when or more withdraws have been made the interest is calculated at the lower range of rates applicable to the account balance. So this will encourage the customer to save.

The Saving builders from Barclays Bank will be appropriate for people in an established family as well. Established families should be able to have at least �10,000 if they would like to use the service.

The rates of interest depend on the account balance and whether any withdrawals have been made from the account in the previous calendar month. Where no withdrawals have been made interest is calculated at the higher range of rates applicable to the account balance. On the other hand when or more withdraws have been made the interest is calculated at the lower range of rates applicable to the account balance. So this will encourage the customer to save.

Day to Day Savings Account from Barclays Bank

The Day to Day savings account is designed for someone who will need immediate access to their money for unplanned expenses or special treats, which will be part of a university’s student’s life style. The customer doesn’t have to be a regular saver and it is cheap to open with just �1 which will be great for the customer. Plus a cash card is available allowing the customer to withdraw up to �300.

Day to Day Savings

Open from

�1

Maximum deposit

N/A

Interest rate

4.26% AER (4.18% gross pa)�

Access

Instant

Interest paid (frequency)

Monthly

Account management

Branch, phone, cash card and online (if registered this for Online Banking)

The day to day savings account will be appropriate for established families. This is because established families will be settled in their homes heading towards paying off their mortgage, so this means that they will be able to afford to take money out on a day to day basis. In addition believe that adults in this life stage will have unexpected things to pay for like birthdays and day to day maintenance of their child.

High Interest Deposit Bond from HSBC

Bonds are usually referred to as risk-free bonds, because the government can raise taxes or simply print more money to redeem the bond at maturity. Some counter examples do exist where a government has defaulted on its domestic currency debt, such as Russia in 1998 (the “ruble crisis”), though this is very rare.

The high interest deposit bond is designed for people in the established families’ life stage. This is because it is designed for people who have between �2000 and �50000 in savings and concerned about falling interest rates and looking to change the rate of their savings. 5.75% AER /gross. Adults living in this lifestyle will have this kind of amount in savings so it will definitely be appropriate for them. The savings can be over 1, 2 or 3 years and the interested can be added on a monthly or annual basis.

Effective Date

Term

Net %

Gross %

AER %

High Interest Deposit Bond

Monthly interest (Fixed Rate)

01.09.08

6 months

4.29

5.37

5.50

12 months

4.48

5.60

5.75

24 months

4.10

5.13

5.25

36 months

4.10

5.13

5.25

High Interest Deposit Bond from HSBC will also be suitable for people in the teenager and student lifestyle this is because students at university or post graduate students will be looking into saving money in high interest. There are a lot of different time scales they can invest for jus to suite them, whether it is 6 months or 3 years.

This will be very appropriate because it will enable them to have a lot of money saved in the bank for when they leave university and preparing to start their own family.

Task 8

Introduction

In this task I have been asked to describe and explain in detail two investment products that will be considered appropriate for two contrasting customers at a given life stage. This will be people in teenager and student life stage and young families.

Income Bonds from National Savings and Investments.

Income Bonds provide the customer with a monthly income at a competitive variable interest rate, with no risk to their capital.

Income Bonds from national savings and investments will be very suitable for young families because the people in this life stage will be doing post graduate work or finishing university. It will be very helpful because the income bonds will provide them with an additional monthly income. This will enable them to help out with your household outgoings, or to contribute to a few of life’s little luxuries. It is very convenient because they can choose to withdraw money when ever they want with no notice and no penalties.

Income Bonds from national savings and investments will also be very appropriate for people in the teenager and students life stage. This is because people in this life style will be provided with an additional monthly income which will be very supportive for their day to day needs. It will be able to support them if their student loan has not been activated. It will also be very helpful for when they are about to leave university and preparing to live by themselves.

Interest Rates

Total Investment

Gross rate pa

AER

Under �25000

4.45%

4.54%

�25,000 +

4.70%

4.80%

Gross is the taxable rate of interest without the deduction of UK Income Tax.

AER (Annual Equivalent Rate) is a notional rate that illustrates what the annual rate of interest would be if the interest was compounded each time it was paid. Where interest is paid annually, the quoted rate and the AER are the same.

The Baby Bond CTF account from The Children’s mutual

The baby bond ctf account is stakeholder account for parents to save and invest their money for their kids for the later future in the government’s way. This will definitely be the key characteristics of adults in the young family life stage.

So that there is a chance for more potential growth, the baby bond account will be in a share-based fund. There are risks in doing this because the value of shares can go up and down, but the baby bond account is a long-term investment of 18 years so a big amount will be made despite the continuous change in the value to the shares. The minimum amount that can be paid in to start the account is �10 so it is easy and cheap to get started, and with all other contributions there could be a potential sum of up to �1200 and that is on top of the government’s addition. The child’s account is increased of its value by 1.5%

The baby bond ctf account will be very suitable adults in the student life stage because it will be a great step to preparing for their children’s future it is a long-term investment of 18 years so a big amount will be made despite the continuous change in the value to the shares. The minimum amount that can be paid in to start the account is �10 so it is easy and cheap to get started, and with all other contributions there could be a potential sum of up to �1200 and that is on top of the government’s addition. The child’s account is increased of its value by 1.5%

Total amount paid in (including �250 voucher and �250 at age 7)

Possible value of Baby Bond(r) Stakeholder account in 18 years time

Based on 5% growth each year

Based on 7% growth each year

Based on 9% growth each year

�0

�500

�821

�1,090

�1,440

�10

�2,660

�3,790

�4,690

�5,840

�25

�5,900

�8,260

�10,100

�12,400

�50

�11,300

�15,700

�19,100

�23,400

�100

�22,100

�30,500

�37,100

�45,400

Task 9

Introduction

In this task I have been asked to describe and explain three other financial services which might be appropriate to the likely financial needs of two contrasting customers.

Income Protection from Royal Bank of Scotland

Income protection is designed as a safety net to keep people financially healthy just in case of a long- term illness or accidental injury which could play havoc on people’s finances. I believe that this will be very appropriate for people in the mature household life stage. Simply because their life is moving at its peak so they will definitely need some sort of back up if something was to go wrong. It could help maintain your family’s standard of living, providing a monthly income to help pay your mortgage, other debts or household bills.

The plan is very flexible they can decide on how long they want their income to be paid if they are off work. It can be until any age from 50 to 65.

The monthly income they receive under the plan is guaranteed until they are fit enough to back to work or until the plan end for example if they intend retirement age.

Income protection will also be suitable and appropriate for people in the post education and pre families life stage. This is because they will be on the way up to starting their life on their own. So it will be vital for them to have some sort of safety net. This is because if there is no form of financial back up it will leave the individual in a very critical position.

Travel Insurance from The Royal Bank Of Scotland

Travel Insurance is designed to cover medical expenses, money invested in non-refundable pre- payments, and other losses that happen while travelling either within one’s country, or internationally. The royal bank of Scotland will be very suitable insurance company for someone to choose because it is one of the biggest travel insurance companies in the UK so they have a big reputation to give their customers confidence in them. Travel insurance will be suitable for people in all life stages simply because everyone should be insured when they are away on holiday.

But I think this will suite people in Mature households more because they will probably have the most expensive assets because they are one of the most families settled in their life.

Travel insurance will be very suitable for people in post graduate and pre families life stage because people in this life stage are very active and tend to travel a lot so it will be very important for them to be insured whilst on holiday.

Car Insurance from The Royal Bank Of Scotland

Car insurance is insurance purchased for cars, trucks, and other vehicles. Its primary use is to provide protection against losses incurred as a result of traffic accidents and against liability that could be incurred in an accident.

Car insurance from The Royal Bank Of Scotland is very good. They provide a courtesy car for the customer when there car is being repaired. If the customer has home insurance with the royal bank of Scotland they will save 15%. Although car insurance is vital for people in all life stages, this service will be very appropriate for people in mature household because of all the benefits that come with it such as the 15% discount that comes with the insurance. That is only available to people with home insurance, and that will be something that mature households will have.

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