You want to buy a laptop computer. Should you pay in cash or by credit? What things do you need to consider when choosing the payment method?

When opening a bank account, you can also receive online banking IDs which, amongst other services, enable you to pay bills or check your account status using the online service.

You notice your payment card is missing. You know it is possible that someone else is misusing the card. 

Assignment 1/7:

Payments – Cash or credit?

You want to buy a laptop computer. Should you pay in cash or by credit? What things do you need to consider when choosing the payment method?

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Which of the following statements about cash payment are true?

When paying in cash, you do not become indebted to the seller. On the other hand, when you pay for a product in advance in cash and the product is only delivered to you later, you forfeit your right as a consumer not to pay if there is a defect in the product, if delivery is delayed - or if you do not receive the product at all. Before making a purchase decision, find out whether the product can be bought elsewhere at more favourable terms.

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Which of the following statements about credit payment are true?

A minor may not enter into a consumer credit contract, which means that credit can only be obtained by someone over 18 years of age. Read the credit contract through carefully – it indicates, among other things, the repayment obligations related to the credit as well as both the lender's rights and obligations and your rights and obligations. Keep the credit contract securely at least for the duration of the contract. Failure to repay credit may lead to a bad credit rating for several years. A bad credit rating makes your life more difficult in many ways: it becomes harder to get a rental apartment; you are unable to make a hire purchase Agreement; you may have to pay your phone bill in advance. Therefore, consider carefully whether to take out credit.

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Which of the following statements about credit payment are true?

Credit is debt, or borrowed money, and it always needs to be repaid. The price of credit consists not only of the borrowed amount, but also of interest and other credit-related expenses (such as setting-up fees and processing payments) and therefore credit is not free. You will also need a regular income to repay the credit. Usually credit is amortised on a monthly basis. You may also consider whether you should first save up part of the purchase price and only fund part of it with credit.

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Assignment 2/7:

Payments – Online banking

When opening a bank account, you can also receive online banking IDs which, amongst other services, enable you to pay bills or check your account status using the online service.

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Can minors have their own online banking IDs?

The bank may grant online banking IDs to a minor with the guardians' consent. Online banking IDs are personal and must not be given to anyone else. Before you begin using the online bank, study the contractual terms of the network service provided by the bank, as well the instructions concerning the storage of the IDs and particularly the secure use of the online bank.

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How should you store your online banking IDs (the user ID and access codes)?

Different banks have different types of online banking IDs. Usually however they consist of a user ID, which is a longer series of numbers and a related list of access codes (or, currently, also an application running on a mobile device). Regardless of the type of your online banking IDs, what they all have in common is that it is important to keep them safe! The general rule is that the user ID and access code list must not be kept in the same place. It is advisable to memorise the user ID. Carefully follow the instructions provided by your bank on the storage of the online banking IDs. If an outsider gets hold of your user IDs, your account may be emptied. The bank will not necessarily compensate for the money you have lost, if you have not stored your IDs with care, as instructed by the bank. If your online banking IDs nevertheless disappear, notify your bank at once!

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You receive an email that looks as if it was sent by your bank. The message says your online banking service is about to be terminated and you may only continue using it if you click the link in the email and log on to the service using your online banking IDs. What should you do?

This is an example of a criminal “phishing email”. The bank will never contact you by email to ask for your online banking IDs – nor will the police or any other authority, whose names have appeared in phishing emails. Do not respond to such messages and do not click on any links in the message! You may report to the bank any phishing emails sent to you. Delete the message from your inbox.

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You are paying your bills using the online bank, on the library computer. What do you do when you have finished your banking?

It is particularly important to be careful to log-off completely when finishing online banking on a computer with common access, in order to prevent the next user from accessing your information. Sometimes the browser software may ask whether you would like to store your user ID or password – you must always decline if you are using a common computer. Also remember to take your access code list and other papers with you when leaving the computer. If you have questions about the use of a library computer, ask the library staff for further information about the use of the computer and data security.

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Assignment 3/7:

Payments – Payment cards

You notice your payment card is missing. You know it is possible that someone else is misusing the card.

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What do you do first when you notice your payment card is lost?

If your card is lost, call the card provider’s blocking service immediately. This is important because your responsibility ceases as soon as you report your card as lost. If someone uses your card, you will not lose your money. The blocking service accepts reports of missing cards 24 hours a day. You get the number of the blocking service from your bank, and it is advisable to save it on your mobile phone, for example.

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What does the blocking service do upon receiving your report about a missing payment card?

Your card stops functioning immediately when you notify the blocking service it has been lost. If a card reported missing is later found, do not use it. Usually a new card is delivered automatically, depending on the practice, either to the bank or to your home address, typically within a week of reporting the loss.

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Before you had a chance to contact the blocking service, you receive a call – the caller says they are the police and that your payment card has been found. The caller requests you to verify the card is yours by providing the PIN code. What do you do?

The personal identification number, the PIN, is for your personal use and it must never be disclosed to anyone else. Neither the police nor another authority, nor the bank will ever call to ask for the PIN for your payment card.

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What kind of responsibility do you have for the loss of your payment card? Which of the following statements are correct?

Your responsibility stops the moment you report your card as lost to the blocking service. Liability for any misuse taking place, after the loss report has been made, passes to the issuer of the card. A payment card should never be handed over to another person. However, if you do that, you will be liable for any purchases made with your card.

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Assignment 4/7:

Agreements – Account agreement

You are about to start your first summer job at the checkout of a grocery store. You will receive a wage for three months and you need an account into which your wages can be paid.

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Can a minor open an account with a bank by themselves?

The finances of a minor, a person under 18 years of age, are primarily governed by their guardian. A 15-year-old may however personally open an account to deposit funds earned from their own work or for example received as a gift from their parents.

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May a minor use their own account?

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Which topics are agreed on in an account agreement among other things?

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Which of the following are part of the account agreement?

When opening an account, you receive a copy of the signed account agreement, the general terms and conditions of the account and a service price list, amongst other things. If a payment card and online banking IDs are linked with the account, separate agreements will be made for those, also including the standard general terms and conditions.

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Is it useful to read through the account agreement before signing it?

Do not sign any agreement you have not read! If there is anything in the agreement that you do not understand, do not hesitate to ask your bank for more information. It is in the interests of both parties that the issues are clear before entering into an agreement.

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Are overdraft situations possible when using a payment card?

Banks generally grant young persons such payment cards where the account balance at the time of payment is verified in connection with use. If there is not enough money in the account, the payment will not go through, and so an overdraft is not possible either. However, there are also payment cards enabling overdraft. Debit card means a payment card where the purchase is debited from your account immediately or after a small delay. Other debit cards verify the amount of money (balance) in the account at the time of purchase, and the payment will not go through if there is not enough money in the account. For example, Visa Electron is such a payment card. Other debit cards verify only when necessary, meaning that is also possible to overdrawn the account. Therefore, when using this kind of payment card, you always need to ensure yourself that there is enough money on the account to make the payment. Otherwise you may accidentally exceed the amount of money on your account, in which case the bank will charge an overdraft fee. Credit card means a payment card providing payment period or credit for making the payment. When paying with a credit card, the amount is not charged from your account immediately, but an invoice is sent to your home for later payment.

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Assignment 5/7:

Agreements – Fixed-term account

You have already accumulated more than a thousand euro from your summer job earnings and gifts.  You are considering what to do with your money, and finally you decide to make a deposit with the bank. There are many kinds of accounts on offer.

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What is the difference between a fixed-term account and a regular current account?

Banks offer different kinds of accounts to their customers. Some accounts are meant for the management of daily finances, while other accounts are for saving money over a longer term. A current account is suitable for managing daily finances. You can direct your student allowance, wages and other recurrent payments to your current account, and pay all bills and invoices from the current account, for example with a payment card or in the online bank. A fixed-term account is a fine alternative if you are prepared to keep the money in the account for the agreed duration, for example a year. The interest paid on the money on a fixed-term account is often higher than the interest paid on a current account.

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When can you withdraw the money from a fixed-term account?

The money in a fixed-term account may not generally be withdrawn before the end of the agreed deposit period. If the money can be withdrawn before the maturity date, it may have an impact on the interest paid. It is also possible that no interest is paid at all. There may also be other costs associated with early withdrawal of a deposit. The agreement terms and conditions determine whether the money on a fixed-term account may be withdrawn and on which terms before the agreed maturity date.

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Assignment 6/7:

Agreements – Mutual fund saving

As a school leaving present, you received 500 euro as a gift. You are considering what you should do with it. You have no special purchases in sight in the near future, and you decide to set the amount aside as savings. As one alternative, you think of mutual fund saving, and you decide to find out about fund units suitable for you.

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How much return do mutual funds make? Does a mutual fund unit always make a positive return, or is it also possible to lose money in fund saving? Which of the following statements is or are correct?

When investing in a mutual fund, you should also keep in mind that investments involve risk. The value of an investment may rise or fall, and the previous performance of a fund is not a guarantee of future results. Before making an investment decision, you should study the prospectuses and fund rules carefully. Special attention should be paid to the investment policy, risks and expense structure of the fund. When buying a fund unit, you should consider how much risk you are willing to take. The investment target should be chosen on the basis of your own preferences.

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You are also interested in when you can get your fund investment back. Which of the following statements is or are correct?

It is worth remembering that there is usually a fee charged for subscription and redemption. In addition, the customer pays management and custody fees and possibly brokerage fees paid to securities intermediaries.

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When you discuss fund investing with the bank clerk, he or she will tell you about different types of funds, such as equity, fixed-income and balanced funds. Which of the following statements is or are correct?

Mutual funds can be divided into equity, fixed-income and balanced funds. In addition, there are so-called funds of funds and non-UCITS funds.

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Which of these statements are correct?

Mutual funds involve the same risks as other kinds of investments. The value of an investment may rise or fall, and the previous performance of a fund is not a guarantee of future results. Return and risk almost always go hand in hand. There is no compensation fund protection for mutual funds. Only money in a deposit account with a deposit bank is covered – subject to certain restrictions – by deposit guarantee. When you surrender your fund units, the redemption is usually subject to a one-time charge.

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Your little brother also gets interested in fund investing after receiving gift money for confirmation. However, he is a minor. What considerations are involved in mutual fund investing by a minor? Which of the following statements are correct?

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Assignment 7/7:

Agreements – Insurance

You are about to begin your studies and finally get the news that you have been allocated a student apartment. You can move into the apartment in a month. You have recently bought a television and a computer with your summer job earnings and you are considering whether you should do something to protect them from potential damage.

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Should you insure your student home – where can you get information?

It is worthwhile asking about your friends’ and parents’ experiences, but it is particularly important to find out from insurance companies what is and isn’t covered by insurance. The Finnish Financial Ombudsman Bureau provides various kinds of information on insurance. There is plenty of choice, since there are over ten non-life insurance companies offering home insurance in Finland.

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How is an insurance contract usually made?

A mere text message to the insurance company does not suffice, but an insurance contract may be made at the branch of an insurance company, using an online service or by telephone. After agreeing on an insurance contract, the insurance company will provide an insurance policy with information that includes the period of validity of the insurance, the insurance premiums payable and the contractual terms of the insurance.

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Is it worthwhile reading through the insurance contract documents before signing them?

It is always worthwhile reading through contracts. The insurance contract documents (the insurance policy and the insurance terms and conditions) describe what is covered by the insurance policy and what is not. You should remember that no insurance compensates for all possible events. If the insurance text seems complex and you do not understand something in it, do not hesitate to ask your insurance company!

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You are about to leave for a holiday in France. The flight ticket has been bought and the hotel booked. The passport, money and toothbrush are ready to go. You are thinking about whether you need to take anything else into account, and you remember insurance. What insurance could be handy during the trip?

Travel insurance covers treatment expenses related to travel illness and travel accidents. Luggage insurance compensates for damage to luggage and for example the purchase cost of necessities if the arrival of your luggage is delayed. Travel insurance may also include liability insurance, which compensates for damage caused by you to other people as well as legal expenses insurance, which covers legal counselling expenses in dispute situations. It is possible to add travel-related insurance policies to home insurance targeted at young people.

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Your travel destination is in Italy. You have a European Health Insurance Card, issued by the Social Insurance Institution of Finland, and you are wondering whether travel insurance is needed on top of this. What is generally covered by travel insurance but not by the European Health Insurance Card?

If you suddenly fall ill or are involved in an accident, a European Health Insurance Card should get you medically necessary acute treatment (in an EU or EEC country and Switzerland) at the same price and under the same conditions as the local residents of the country are treated by the local public health care. In contrast, travel insurance will cover treatment expenses for sickness or accidents whilst travelling, and in severe cases also repatriation. Treatment expenses include the expenses for treatment or diagnosis along with reasonable travel expenses. However there are differences in travel insurance provided by different insurance companies, and therefore it pays to compare travel insurance before the trip.

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Does the Finnish State always help people who wind up in trouble abroad to return home?

The Finnish State will not help people, who wind up in trouble abroad, to return home. The Ministry of Foreign Affairs recommends all travellers take out comprehensive travel insurance to cover unexpected events.

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You are on a trip and intend to participate in a diving course. If you get hurt during a dive, will the treatment expenses be covered by the travel insurance?

Travel insurance does not usually cover getting hurt in risky hobbies without supplementary clauses or charges. Such risky hobbies include, for example, fight and contact sports, motor sports, aviation sports, such as parachuting, bungee jumping and hang gliding, climbing, downhill and speed skiing, scuba diving and offshore boat racing. If you intend to take part in these kinds of more dangerous sports during your trip, find out about the validity of your insurance cover from your insurance company, in advance. The insurance cover may often be expanded by agreeing on it in advance with the insurance company.

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You have had countless conversations with your parents about getting a moped. Now it finally looks as if you will be getting one as a gift. What issues need to be considered about owning a moped? Is it enough just to fill up the tank?

In Finland, all motor vehicles used in traffic – including mopeds – must have statutory traffic insurance usually referred to as motor liability insurance, because in traffic damage can also be caused to an external party. Motor liability insurance is therefore also mandatory for mopeds.For any damage to your own moped, you can also take out voluntary vehicle insurance, or so-called comprehensive cover. It compensates for damage to your own moped for example in cases of collision or theft. Voluntary vehicle insurance may be comprehensive or limited: comprehensive insurance covers more but also costs more.

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Which of the following types of damage are covered by statutory motor liability insurance?

Motor liability insurance does not cover damage caused to the insured motor vehicle or any property loaded on it. However, it covers damage to clothes worn or personal belongings carried by a passenger.

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Your moped does not have valid motor liability insurance and you cause a traffic accident. Which of these statements are correct?

Any damage caused by an uninsured vehicle is covered by the Finnish Motor Insurers' Centre. However, any personal injury caused to the owner and holder of an uninsured vehicle are excluded from the scope of compensation. Since your moped had no motor liability insurance, the Finnish Motor Insurers' Centre will levy from you, as the owner or holder of the moped, an increased insurance premium (as compensation) for the entire period the moped has been without insurance cover.

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Your moped has no valid motor liability insurance. You get in a traffic accident caused by another moped. Which of these statements are correct?

The motor liability insurance of the moped which caused the accident compensates for any personal and property damage caused to you in accordance with the Motor Liability Insurance Act. Since your moped had no motor liability insurance, the Finnish Motor Insurers' Centre will levy from you, as the owner or holder of the moped, an increased insurance premium (as compensation) for the entire period when the moped has been without insurance cover.

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You have gone to the shopping centre with your friends and left the moped parked outside. Your moped gets stolen. Will motor liability insurance cover the theft?

Motor liability insurance does not cover a stolen moped. To cover theft of a moped, you can take out voluntary vehicle insurance, so-called comprehensive cover. It is intended as protection for the moped in case of theft.

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Introductory

Assignment 1/7

Payments – Cash or credit?

Assignment 2/7

Payments – Online banking

Assignment 3/7

Payments – Payment cards

Assignment 4/7

Agreements – Account agreement

Assignment 5/7

Agreements – Fixed-term account

Assignment 6/7

Agreements – Mutual fund saving

Assignment 7/7

Agreements – Insurance