MTKS3 Session 3


In all of the programmes, we explain that interest is both a reward for saving and a charge for borrowing. As a reward, it is known as AER (Annual Equivalent Rate), but an easy way to remember this is to think of the E representing ‘Earn’. It is a percentage of money paid on top of what is already in your account, so it should be as high a number as possible. As a charge, it is known as APR (Annual Percentage Rate), but you can think of the P as representing ‘Pay’. It is the percentage you have to pay back, on top of the original borrowed amount.  

Payments and money habits – contactless payment

As of March 2020, 85.2 million contactless cards were debit cards, making this the most common type of contactless payment card on the British market. The maximum payment limit is £100.

Below are a list of pros and cons of contactless payment:


  • Speed and efficiency – A contactless payment takes seconds to process. Also falling within the scope of contactless payments are smart watches, key fobs, rings and others. 
  • Safety and hygiene: This contact reduction makes for increased safety and better hygiene. With the onset of the COVID-19 pandemic, major financial institutions issued higher contactless limits around Europe.
  • Customer satisfaction: Due to the speed at which contactless payments are processed, less waiting at a queue means less customer frustration and more satisfaction.

The cons:

  • Security: Because contactless limits were increased due to the COVID-19 pandemic, this means that if your card is lost or stolen, the fraudster will be able to make purchases below contactless limit of £100. However, this can easily be circumvented by contacting your bank or financial services provider immediately once you are aware of the theft or loss of your card. Indeed, contactless cards and mobile devices represent a mere 2.9% of total card fraud loss in the UK, it’s safe to say that contactless payments are relatively secure and trustworthy. (Source
  • Acceptance: Contactless payment is still not accepted everywhere, and in particular other countries may have limited acceptance.

Financial products 

Here are some simple definitions to use to explain various financial products to young people. 

Account – A place to store your money. You can deposit (pay in) and withdraw (take out). 

Statement – A record of the balance in a bank account and the amounts that have been paid in and out. 

Debit Card – A card that allows you to pay directly for goods and services in any place where it is accepted. 

Statement – A record of the balance in a bank account and the amounts that have been paid in and out. 

Credit History – A track record of an individual’s borrowing and repayments. 

Interest – A reward for saving money or a charge for borrowing. 

Overdraft – Borrowing from the bank by taking out more than you have in your account (going into minus figures). 

Debt – Owing money to someone or a company.