<< Chapter < Page Chapter >> Page >

Economic and management sciences

Grade 9

Business, consumer and financial knowledge and skills

Module 25

Forms of credit purchase and methods of payment


To investigate forms of credit purchases and methods of payment and to be able to make recommendations

[LO 3.6]

As the consumer does not always have sufficient cash to make purchases, various forms of credit business have been developed. This means that purchases are made now, but payment is only made at a later stage. Credit purchases can be made in a number of ways - a very common way is to buy on account.

The consumer opens an account at a particular shop and makes his purchases. At the end of the month he receives an account and pays a monthly amount.

Hire-purchase transactions are another form of credit used for buying expensive items such as a car, for example. A fixed instalment is paid every month until the entire purchase price, plus interest, has been paid.

Today, credit cards are a very popular method of credit. Various purchases can be made during the month and a copy of all the client’s purchases is sent to his bank. At the end of the month the amount owing is deducted from the client’s bank account.

A consumer may pay for his purchases in a number of ways. The most common way of making payments is by means of cash, but it is not safe to carry large amounts of cash. For this reason increasing use is being made of electronic modes of payment where money is not handled physically at all.

A popular way of paying is by cheque. The holder of a cheque account instructs his bank, by means of the cheque, to pay a specific amount of money to a certain person. The instruction is carried out when the cheque is presented for payment at a bank.

Payments may also be made through the Post Office by means of postal orders. These payments can safely be sent to any place in the country. The amount of money you want to pay, plus commission, is paid in at a post office and the postal order is sent to the person concerned. On receipt of the postal order, it can be exchanged for cash at the post office.

Debit cards may also be used for payments. The money is deducted electronically from ones bank account. This is a safe method of payment, as one need not carry cash with one. One can also not spend more money than one had in ones bank account. The bank balance can be checked at any time at an automatic teller machine.

Traveller’s cheques are useful when travelling abroad. The money is paid in at a bank and in exchange for it one receives traveller’s cheques that one can use to make payments in other countries. Traveller’s cheques are provided in American, Canadian or Australian dollar, Euro, British pound, Swiss franc, Japanese yen and Saudi rial.

Although an increasing number of people are buying on credit, it is still better to pay cash for ones purchases.

Cash purchases can be made at any shop. Some businesses are prepared to give a discount for cash.

Credit is expensive, because interest and administrative costs have to be added.

Paying cash means that one will not purchase more than one can afford. Easy credit can result in ones spending money that one does not actually have. When the money has to be repaid, financial problems can occur.

In a world of credit and electronic payments there is still a place for cash payments.


  • Collect information from financial institutions and shops about different methods of payment.
  • Determine which methods will be the best for the following people and give reasons for your answers:

(a) a professional person

(b) a student

(c) a farmer

(d) a pensioner


Learning Outcomes(LOs)
LO 3
MANAGERIAL, Consumer and Financial Knowledge and SkillsThe learner will be able to demonstrate knowledge and the ability to apply responsibly a range of managerial, consumer and financial skills.
Assessment Standards(ASs)
We know this if the learner :
3.1 completes a basic income statement and balance sheet for a service and retail business;
3.2 investigates the public relations, social responsibility and environmental responsibility strategies and actions of different businesses and organisations;
3.3 completes cash and credit transactions in the books of service and retail businesses;
3.4 uses keyboard skills and function keys in developing, storing, retrieving and editing business documentation;
3.5 analyses financial statements for decision-making at a basic level;
3.6 differentiates between the forms of credit purchases.



(a) A professional person – By virtue of his professional status such a person can enjoy certain benefits at banks, such as a special cheque account and other facilities. As professional people do not have much time to spend on their personal financial affairs, a cheque account and credit cards as well as electronic modes of payment are useful. Traveller’s cheques are handy on overseas trips.

(b) Student – As students do not earn a full-time income they often have special needs for which most banks cater by means of special packages. Credit cards are handy if self-discipline is exercised so that not too much is purchased on credit. Debit cards are handy because the student cannot spend more money than he has in his account.

(c) Farmer – As farmers annually have the proceeds of crops and must make payments regularly, a cheque account with overdraft facilities are suitable. A monthly bank statement and copies of cheques, or cheque counterfoils assist in checking payments and in planning. Distance is usually a limiting factor and in this case cheque payments and electronic payments are advantageous.

(d) Pensioner – It is dangerous for older people to carry cash. They should rather make use of credit cards or debit cards to make their payments.

Questions & Answers

how can chip be made from sand
Eke Reply
is this allso about nanoscale material
are nano particles real
Missy Reply
Hello, if I study Physics teacher in bachelor, can I study Nanotechnology in master?
Lale Reply
no can't
where is the latest information on a no technology how can I find it
where we get a research paper on Nano chemistry....?
Maira Reply
nanopartical of organic/inorganic / physical chemistry , pdf / thesis / review
what are the products of Nano chemistry?
Maira Reply
There are lots of products of nano chemistry... Like nano coatings.....carbon fiber.. And lots of others..
Even nanotechnology is pretty much all about chemistry... Its the chemistry on quantum or atomic level
no nanotechnology is also a part of physics and maths it requires angle formulas and some pressure regarding concepts
Preparation and Applications of Nanomaterial for Drug Delivery
Hafiz Reply
Application of nanotechnology in medicine
has a lot of application modern world
what is variations in raman spectra for nanomaterials
Jyoti Reply
ya I also want to know the raman spectra
I only see partial conversation and what's the question here!
Crow Reply
what about nanotechnology for water purification
RAW Reply
please someone correct me if I'm wrong but I think one can use nanoparticles, specially silver nanoparticles for water treatment.
yes that's correct
I think
Nasa has use it in the 60's, copper as water purification in the moon travel.
nanocopper obvius
what is the stm
Brian Reply
is there industrial application of fullrenes. What is the method to prepare fullrene on large scale.?
industrial application...? mmm I think on the medical side as drug carrier, but you should go deeper on your research, I may be wrong
How we are making nano material?
what is a peer
What is meant by 'nano scale'?
What is STMs full form?
scanning tunneling microscope
how nano science is used for hydrophobicity
Do u think that Graphene and Fullrene fiber can be used to make Air Plane body structure the lightest and strongest. Rafiq
what is differents between GO and RGO?
what is simplest way to understand the applications of nano robots used to detect the cancer affected cell of human body.? How this robot is carried to required site of body cell.? what will be the carrier material and how can be detected that correct delivery of drug is done Rafiq
analytical skills graphene is prepared to kill any type viruses .
Any one who tell me about Preparation and application of Nanomaterial for drug Delivery
what is Nano technology ?
Bob Reply
write examples of Nano molecule?
The nanotechnology is as new science, to scale nanometric
nanotechnology is the study, desing, synthesis, manipulation and application of materials and functional systems through control of matter at nanoscale
how did you get the value of 2000N.What calculations are needed to arrive at it
Smarajit Reply
Privacy Information Security Software Version 1.1a
Got questions? Join the online conversation and get instant answers!
Jobilize.com Reply

Get Jobilize Job Search Mobile App in your pocket Now!

Get it on Google Play Download on the App Store Now

Source:  OpenStax, Economic and management sciences grade 9. OpenStax CNX. Sep 15, 2009 Download for free at http://cnx.org/content/col11074/1.1
Google Play and the Google Play logo are trademarks of Google Inc.

Notification Switch

Would you like to follow the 'Economic and management sciences grade 9' conversation and receive update notifications?