Life in the UK test

Chapter 5:EVERYDAY NEEDS

Money and Credit

UK Bank notes are in four denominations (values) of £5, £10, £20 and £ 50. Northern Ireland and Scotland have their own bank notes which are valid anywhere in the UK, though sometimes people may not realise this and may not accept them.

The Euro

In January 2002 Twelve European Union (EU) states adopted the euro as their common currency. The UK government decided not to adopt the euro at that time, and has said it will only do so if the British people vote for the euro in a referendum. The euro does circulate to some extent in Northern Ireland, particularly in the towns near the border with Ireland.

Foreign currency

You can get or exchange foreign currency at banks, building societies, large post offices, or bureaux de change. The exchange rates vary and you should check for the best deal.

Banks and building societies
Most adults in the UK have a bank or building society account. Many large national banks or building societies have branches in towns and cities throughout the country. It is worth checking the different types of account each one offers. Many employers pay salaries directly into a bank or building society account. There are many banks and building societies to choose from.

To open an account, you need to show documents to prove your identity, such as a passport, immigration document or driving licence. You also need to show proof of your address like a tenancy agreement or utility bill. It is also possible to open accounts in some supermarkets or on the internet.

Cash, credit and debit cards
Cash cards allow you to use cash machines to withdraw money from your account. For this you need a Personal Identification Number (PIN) which you must keep secret.It allows you to pay for goods and services without using cash.You must have enough money in your account to cover what you buy.
Credit cards can be used to buy goods in the shop, on the telephone and over the internet. A store card is like a credit card but used only in a specific shops. store cards do not draw money from your bank account, but you will be sent a bill every month. If you do not pay the total amount on the bill, you will be charged interest.
Although credit and store cards are useful the interest rate is usually very high and many people fall into debt this way.If you lose your credit or store cards you must inform the company so that they will block those cards not to be used by someone else.

Credit and loans
You can borrow money from banks and other institutions. You must be very sure of the terms and conditions when you decide to take out a loan. If you are uncertain you can get impartial advice from the Citizens Advice Bureau or independent Financial Advisors(IFA)

Banks and other organisations use different information about you such as your occupation, address, salary and previous credit record.To make a decision about a loan Credit score is the main determinant of your eligibility for a loan and the ability to negotiate down terms such as interest. Therefore it is important to keep your score as high as possible. You can regularly check your score with organisations called credit agencies .
If you apply for a loan you might be refused.If it happens you have the right to ask for the reason.

Credit unions
Credit unions are financial co-operatives owned and controlled by their members. The members pool their savings and then make a loan from this pool. Interest rates in credit unions are usually lower than bank. There are credit unions in many cities and towns. To find the nearest credit union contact the Association of British Credit Unions ABCUL) on: www.abcul.coop.

Insurance

As well as insuring their property and possessions many people insure their credit cards, mobile phones and laptops. They also buy insurance when they travel abroad in case they lose their luggage or need medical treatment.

Insurance is compulsory if you have a car or motorcycle (third party insurance). You can usually arrange insurance directly with an insurance company, or you can use a broker who will help you get the best deal.

Social security
The UK has a system of social security which pays welfare benefits to people who do not have enough money to live on. Benefits are usually available for the sick and disabled, older people, the unemployed and those on low incomes.
People who do not have legal right of residence (or ‘settlement’) in the UK cannot usually receive benefits. Guide to benefits is available from Jobcentre Plus offices, local libraries, post offices and the Citizens Advice Bureau.

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