Banking Services (Junior Cert Business Studies): Revision Notes
Banking Services
Banking services are an essential part of personal finance, providing individuals and businesses with various financial tools and facilities to manage their money effectively.
What are commercial banks?
A commercial bank is a financial institution that offers a wide variety of money-related services to both businesses and individual customers.
Commercial banks are often referred to as "high-street banks" because you can find them in most cities and towns across Ireland. Each location where a bank operates is called a branch. For example, Bank of Ireland operates over 250 branches throughout the country.
Major commercial banks in Ireland
The main commercial banks operating in Ireland include:
- Bank of Ireland
- Allied Irish Bank (AIB)
- Ulster Bank
- KBC
- Permanent TSB
- Barclays Bank Ireland
These banks compete with each other to provide the best services and attract customers, which often leads to better deals and improved services for consumers.
Core banking services
Commercial banks provide their customers with a comprehensive range of financial services:
- Current accounts - for everyday transactions
- Deposit and savings accounts - for storing money safely
- Investment options - to help money grow over time
- Borrowing facilities - including credit cards, overdrafts, and loans
- Payment services - such as standing orders and direct debits
- Online banking - for convenient account management
- Foreign currency exchange - for international transactions
Current accounts
A current account is a basic banking account designed for day-to-day financial transactions. Money from your salary or wages is typically paid directly into this account by your employer.
Current accounts have several key characteristics:
- No interest is earned on the money in the account
- Banks usually charge fees for various transactions
- Account holders can withdraw money whenever needed
- Fees are typically charged quarterly (four times per year)
Opening a current account
To open a current account, you need to complete an application process:
Application methods:
- Online through the bank's website
- By telephone
- In-person at a bank branch
Required information:
- Personal details (name, address, date of birth)
- Employment information (employer and income details)
- Contact details (phone number and email address)
Required documents:
- Proof of identity (such as a passport or driving licence)
- Proof of address (such as an electricity bill)
Once your application is approved, the bank will provide you with an account number and a debit card.
Using your current account
There are several ways to access and use money in your current account:
Debit cards
Debit cards allow you to make payments in shops and withdraw cash from ATMs. The system works through "chip and PIN" technology, where you insert your card into a reader and enter your unique four-digit Personal Identification Number (PIN). Modern cards also support contactless payments of up to €30.
Other payment methods include:
- Cheques - Written instructions to the bank to pay a specific amount to a named person
- Standing orders - Automatic regular payments of fixed amounts (for example, paying €950 rent on the 1st of every month)
- Direct debits - Variable automatic payments where amounts can change (such as monthly phone bills that vary with usage)
- Bank drafts - Guaranteed payments issued by the bank, useful for large purchases like cars to ensure secure money transfer
Borrowing services
Borrowing money means receiving an agreed sum from a financial institution that must be repaid, usually with interest.
Commercial banks offer several borrowing options:
Overdrafts
An overdraft allows you to withdraw more money from your current account than you actually have, up to an agreed limit (for example, €500). Interest is charged on the overdrawn amount, making this an expensive form of short-term borrowing.
Credit cards
A credit card enables you to borrow money to pay for goods and services up to a set spending limit. Credit cards are widely accepted in shops, restaurants, and online retailers worldwide.
Key features of credit cards:
- Operated by companies like Mastercard or Visa
- The bank sets the terms (spending limit and charges)
- You receive a monthly bill showing all transactions
- You can pay the full balance or make partial payments
- Interest is charged if the full balance isn't paid within the specified timeframe
- Unlike debit cards, credit card payments don't immediately come from your current account
Credit cards offer more flexibility than debit cards but require careful management to avoid accumulating debt through interest charges.
Loans and mortgages
- Loans - Sums of money borrowed for specific purposes and repaid over an agreed period
- Mortgages - Special types of loans secured against property, typically used to buy houses or apartments
Bank statements
A bank statement is a regular record that shows all transactions into and out of your account over a specific period.
Bank statements provide valuable information:
- Account balance on particular dates
- All money paid into the account (credits)
- All money paid out of the account (debits)
- Interest earned (if applicable)
- Fees and charges applied by the bank
Bank statements serve as proof of income and expenditure, which financial institutions may require when you apply for loans or other services.
Online banking
Online banking is a digital service that allows you to manage your finances using the internet, available 24 hours a day.
The majority of Irish people now use online banking rather than visiting physical bank branches. According to Eurostat data, 58% of Irish citizens used online banking in 2018, with the highest usage among people aged 25-34.
Online banking features
Customers can use online banking to:
- Check account balances and view transaction history
- Transfer money between their own accounts
- Send money to other people's accounts
- Pay bills and set up automatic payments
- Apply for loans, overdrafts, and credit cards
- Open savings accounts
- Use budgeting tools for financial planning
- Top up mobile phone credit
Many banks also offer smartphone apps, making it even easier to manage finances on the go.
Key Points to Remember:
- Commercial banks provide essential financial services including current accounts, borrowing facilities, and online banking
- Current accounts are used for everyday transactions but don't earn interest, and banks charge various fees for services
- Opening an account requires proper identification and address verification
- Multiple payment methods are available including debit cards, standing orders, direct debits, and bank drafts
- Online banking has become the preferred way for most people to manage their finances, offering convenient 24/7 access to banking services