Business BTEC Unit 3 - Aim B

What is the Bank of England? It's the UK's central bank. Advantages of the Bank of England - responsible for UK's financial stability - interest rate designed to achieve stable economy 00:02 01:44 Disadvantages of the Bank of England - increase in interest leads to expensive borrowing - members of public cannot access it What is a bank? It is a financial institution licensed to receive deposits and make loans (owned by shareholders). Advantages of banks - offer a range of services and account types - provide a secure place to store money - pay interest on credit balances (and charge high rates on borrowing, leading to increased profits) Disadvantages of banks - savings only protected up to £85,000 - may charge for certain accounts (premium account) - profit-making organisation (makes the cost to individual higher) What is a building society? It is a financial institution that provides banking and financial services to its members (account holders). Advantages of building societies - a secure place to store money - costs kept down (due to being owned by members) - pay interest on credit balances on most accounts Disadvantages of building societies - savings only protected up to £85,000 - lack business drive (not for maximising profits, local, for the needs of people) - may not give quality deals compared to banks What are credit unions? They are financial cooperatives owned and run by their members. Advantages of credit unions - secure places to store money - not for profit organisation (cost kept down) - offers additional services Disadvantages of credit unions - savings only protected up to £85,000 - lack of business drive (no profit interest)