This is not a militant decision to abandon papers and coins. Money can be convenient, help control budget and budget, and needs support to help many older people who do not or cannot change. However, most people should now use plastic for all significant purchases.
Chargeback is the basic protection on most plastics.
With credit, debit, and most prepaid and charged cards, you get chargeback protection (full information on mse.me/chargebackprotection), that is, if you do not receive what you paid, you can claim in 120 days and ask your card provider to return your money. This is not a legal protection, but is part of the Visa, Mastercard and Amex rules.
I prefer credit cards
I spend all of my expenses on them as DONE RIGHT, that is, refunded in full every month, so there's no interest, credit cards determine:
- They have stronger protection.
In addition to chargeback protection, all UK credit cards are also protected by Section 75 of the Consumer Credit Act 1974 for items costing between £ 100 and £ 30,000 (full details). mse.me/section75) This means that the card company is solely responsible for the dealer, and that is powerful – for example, if you go to Brazil to buy your wax in bulk, bring it home and find it defective, you can simply ask card company to request a refund.
- Section 75 protects the entire transaction, for example pay 1p for a £ 10,000 car and is protected
Pay up to a penny on your credit card and the card company is responsible for the full amount – however, with a debit card, you will only receive the amount paid on the card. A woman contacted me to thank me for reading my information and placing a £ 200 deposit for a £ 23,000 kitchen on her credit card – the company went bankrupt before delivery and received the full amount.
Top Credit Cards for Rewards
The key to using a credit card is to neutralize your debt capacity and turn it into a pure transaction card by paying it FULL every month, preferably by direct debit, and never using it to withdraw money.
Then make all of your monthly card spending instead of cash or debit cards – although stick to the credit line and don't see it as an excuse for additional spending.
There is so much to choose from, and what is right for you is a personal choice. There is a complete list at mse.me/cashbackcard, but here are some of the main ones:
- Get five percent refund on expenses
The www.americanexpress.com/uk Platinum Everyday card offers a five percent refund on all spending within the first three months (maximum £ 100), and up to one percent later (22.9 percent APR if you don't pay fully). You will need to spend £ 3,000 + / year to get a refund.
- £ 25 free at M&S for buying a banana
New bank holders bank.marksandspencer.com get 2,000 bonus M&S points worth £ 20 if you spend something on the card within the first 90 days – plus a 500 M&S spend bonus voucher, so buy a banana in M&S and you've earned £ 25 (19.9% APR if you don't pay in full).
- Get 0.5% refund on overseas spending
In addition to paying a refund for all expenses, the www.tandem.com credit card is a cheap card specializing abroad – so it doesn't add the usual three percent exchange rate and you'll get the same near rate. Perfect exchange rate that banks make when you spend it overseas (18.9% APR rep if you don't pay in full). It's unbeatable for reimbursement and overseas spending individually, but it wins as a card spending solution.
What about people who don't trust themselves?
While these are credit card strengths, if done correctly, they can be a dangerous temptation. So if you have impulse control issues or don't trust yourself, don't risk switching to a credit card – getting into a steaming pile of unnecessary debt is a greater risk than a lack of protection and a lack of repayment.
Martin Lewis is the founder and president of MoneySavingExpert.com. To join the 13 million people who receive your free weekly Money Tips email, visit www.moneysavingexpert.com/latesttip