Should you ditch cash for plastic fantastic?
IS IT time to ditch cash?
Cash simply isn’t a safe way to spend. It lacks the protection that you get when paying with plastic.
Cash can be convenient, help impulse control and budgeting, and needs supporting to help many older people who won’t or can’t change.
Yet most people should now use plastic for all significant purchases.
CHARGEBACK IS THE BASIC PROTECTION ON MOST PLASTIC
WITH credit, debit and most charge and prepaid cards you get chargeback protection (full info at mse.me/chargebackprotection), meaning if you don’t get what you paid for, you can complain within 120 days and ask the card provider to give your money back.
This isn’t legal protection but is part of the Visa, Mastercard and Amex rules.
I prefer credit cards though, I do all my spending on them as done right, ie repaid IN FULL each month so there’s no interest. Credit cards rule because they have stronger protection. As well as chargeback protection, all UK credit cards are also protected by Section 75 of the Consumer Credit Act 1974 for items costing £100-£30,000 (full info mse.me/section75).
This means the card firm is JOINTLY liable with the retailer, and that’s powerful – eg. if you buy something and find it’s faulty, you can simply ask the card firm to sort out a refund.
Section 75 protects the WHOLE transaction, eg, pay 1p for a £10,000 car and it’s ALL protected.
Pay even a penny on a credit card bill, and the card firm’s liable for the entire amount – yet with a debit card, you’d only get back the amount paid on the card.
THE TOP CREDIT CARDS FOR REWARDS
THE key to using a credit card is to neuter its debt ability and turn it into a pure transaction card by paying it off IN FULL every month, and never using it to withdraw cash.
Then do all your monthly spending on the card rather than cash or debit cards.
There are a lot to choose from, and which is right for you is a personal choice. Here are a couple of the top ones:
■ Earn 5% cashback on spending: The american express.com/uk Platinum Everyday card gives 5% cashback on all spending in the first three months (max £100), then up to 1% after (22.9% rep APR if you don’t fully repay). You’ll need to spend £3,000+/yr on it to get any cashback.
■ Free £25 at M&S for buying a banana: New bank.marks andspencer.com cardholders get 2,000 bonus M&S points worth £20 if you spend anything on the card in the first 90 days – plus there’s a 500 bonus point voucher for M&S spending, so buy a banana in M&S and you’ve made £25 (19.9% rep APR if you don’t fully repay).
WHAT ABOUT PEOPLE WHO DON’T TRUST THEMSELVES?
WHILE these are the strengths of credit cards if DONE RIGHT, done wrong they can be a dangerous temptation.
Martin Lewis is the founder and chair of MoneySavingExpert.com. Get his free Money Tips weekly email at moneysavingexpert.com/latesttip