A lot of conventional money saving wisdom says that we should try and leave the plastic at home: when you use cash, the theory goes, you have a better sense of what you’re actually spending.
But in this modern era, where cash machines and physical bank branches are disappearing while virtually every shop takes credit or debit payments, it might be time for a new strategy.
Okay, so it might be too soon to swear off cash entirely… but here are three great reasons to consider paying with debit or credit card more in the new year. As a side note, do remember that you’ll need to pay your credit card in full each month to avoid interest.
It’s usually safer
There are a bunch of useful safety features when you use a credit or debit card, which can help you to get your money back if there’s an issue in the future. These include:
- ‘Section 75’ protection which means that, when you pay by credit card, the card provider is liable for amounts between £100 and £30,000. This means that if a retailer goes out of a business and you need to claim back money then you can get funds back from the card provider instead. You can go to the financial ombudsman to claim this money back.
- Your credit card bill or bank statement is proof of the money that you spent at a specific store on a specific store at a specific day. This can be very helpful if you lose your receipt but need proof of purchase.
- Aside from ‘section 75’, chargeback protection can also help you to get your money back – from both debit and credit card providers. If you don’t receive the item that you purchased, you can ask the card company to request the money back from the supplier’s payment method. They’re not legally obligated to help, but in many cases you’ll be able to get your money back.
It’s easier to measure what you’re spending
It’s hard to keep track of the range of modern banking apps that are available to help you record and analyse your spending habits. These can be great tools to take advantage of. Whether you choose to use a tracker tool provided by your bank, or an app which links up to your account to measure transactions, the result is a far better understanding of where your money goes every month. For anyone looking to save more, this could be invaluable.
You might make money on your purchases
If you’re signed up to a bank account or credit card which offers cashback rewards then you could also start making money back on some your purchases. Different banks and card providers will have their own way of making this work, but the general principle is that you pay using their card in order to get a percentage of the cost put back into your account.
It doesn’t usually happen instantly and isn’t always guaranteed – so it’s a good idea to look for cashback deals on purchases that you were planning to make anyway (rather than buying something just for the cashback). It can be a great way to cut the cost of big ticket items, though, and as banks compete for our loyalty there are some quite generous offers around.