/ Money

Do you splash your cash or pay with plastic?

Close-up of cash

Cash is the most popular way to pay in UK shops according to the British Retail Consortium. So do you prefer to flash the plastic or stump up the cash when you’re shopping?

The new research looked at 10bn retail payments made last year, and found that just over half of all transactions were made in cold, hard cash.

Personally, I almost always pay for things using my debit card – the second most popular payment type accounting for 30% of transactions.

But this is mainly because I’m just not in the habit of going to a cashpoint. I don’t feel comfortable carrying more than about £20 in cash, and £20 definitely wouldn’t cover a weekly shop at my local supermarket.

That said, only change will do for the local corner shop. When I’m picking up a pint of milk (and the odd packet or two of Jaffa Cakes), my local shop has a minimum card limit of £10. The change in question tends to be kept in various pots around my room from where I’ve emptied my purse out periodically. And this brings me to another bugbear of using cash – it can be heavy!

Can cash and cards help you budget?

I suspect that most people have a primary preference for using a particular payment method. But of course, there will always be occasions when you need to be flexible.

I’ve seen friends try to be careful with their money over the years, often by trying to limit their spending to one payment method or another. For example, one friend likes to set themselves a cash budget for the week when times are getting tight, leaving the cards at home to avoid temptation. This works for her, but personally, if I’ve got a purse full of notes, I automatically feel richer than I really am. And this can only lead to trouble.

Another of my friends likes to pay for all their food shopping and socialising expenses on one credit card, which then gets paid off at the end of the month. This means it’s easy to see at a glance how much has been spent on non-essentials, and can work to scare you into spending less. I’m planning to try this one soon myself.

I also have a friend whose boyfriend puts her credit card in the freezer so it has to be defrosted before use, making impulse purchasing impossible. A novel idea, but I’m not sure it would work for me.

What is your preferred payment method? Do you find that paying a certain way makes it easier for you to budget effectively?

What is your preferred payment method for shopping?

Plastic (credit or debit cards) (78%, 320 Votes)

Cash (21%, 87 Votes)

Other (tell us in the comments) (1%, 3 Votes)

Cheques (0%, 0 Votes)

Total Voters: 410

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I tend to use my credit card for every purchase going. Something about earning interest on that money for as long as possible although nowadays there’s hardly any interest to be had. And have a direct debit setup to pay it off in full every month.

P.S. Jaffa cakes 60p for a box of 12 in Sainsburys atm

I generally use cards to pay for purchases over £10. I prefer to pay by credit card but will switch to debit card if there is a surcharge. With small businesses ask how they would prefer to be paid, aware of the cost of processing a credit card transaction. The reason I like credit cards is that I can be sure that I have sufficient money in my bank account to pay the bill, which is done by monthly direct debit.

I use several companies that don’t have card facilities and prefer cheques or cash. Most are small businesses, but one is a city centre branch of a national copying and printing company. They are always happy to send out an invoice, so anyone who turns up without cash or cheques will not be disappointed. Very quaint but very helpful too.

I love your anecdote about the guy who keeps his card in the freezer, Catherine.

I use cash in small shops or for small purchases, a debit card for consumables, and a credit card [or store card where applicable] for major purchases, permanent articles, on-line purchases, and anything where I want the S75 protection. I always keep some £1 and 10/- notes in my wallet in case of emergencies.

10/- notes? has anyone else picked up on this? last time they were in issue was 1970 I think!

You are obviously not familiar with John’s fine sense of humour, Lorna. 🙂

The comment has already been commented on.

It depends on the cost of the purchase and how much I have in my purse.
Generally I pay for low value purchases by cash and purchases over £20 or so by debit card. I often get cash back when I pay by debit card to save me going to the bank. I use credit cards for higher value items and for flights and holidays. I get an extra years warranty on TV’s and kitchen appliances, etc. when I pay for them using my Nationwide credit card.

richard says:
5 June 2013

I always pay by credit card if possible – because I can follow all purchases on-line which gives a better idea and record of my daily finances rather than paper receipts which can get lost (First Direct is brilliant for this ) – Debit card only used for cash out of ATM as it a direct connection to my current account and is less secure if used for retail purchases – I carry around £100 cash for emergency payments to those who don’t have credit card facilities. But I access my credit card details on-line at least once a week – normally more – to ensure any possible fraudulent activity can be detected early – and I always pay of all credit card debts on the same day every month without fail – I never have a credit card balance that incurs an interest charge,

I pay with one credit card for anything I can and pay in full every month. It helps my householding accounting to keep track of spending, avoids carrying too much cash and, as a bonus, gives a minor reward in vouchers. The danger of any card is impulse buying those lovely things you don’t really need or can’t really afford – somehow that was less tempting when you had to extract cash from a wallet (John Ward – you won’t get far with a 10/- note these days but they were worth having in their day).
Your survey may be a little oversimplified? On this albeit small poll so far 82% prefer to pay by card, whereas 50% of transactions are in cash? Presumably most of those transactions are for small amounts that you (and I) wouldn’t use a card for? However now selfpay tills are increasingly common even a very low cost item can be paid for by card – I bought a £1 item this way at B&Q. I would never have done this at a real till.

Alwyn Maynard says:
5 June 2013

I’ve had a revelation!

The chip was falling out of my debit card so i ordered a new one, which I have now been waiting over a week for!

In the mean time I have had to go to the bank and withdraw money as and when it is required, using my driving licence for ID.

This method financial management has already seen me have £200 more money than I would have usually at this time of the month. Is this because having a debit card in your hand increases the likelyhood that you’ll impulse buy stuff?

I might just forget to pick up the card anyway and enjoy not having the temptation to impulse buy stuff all the time.

It looks like I could be a lot better off.

I always pay by credit card in order to receive points, airmiles or cashback. I use American Express whenever possible because they charge retailers more and they therefore give me more back in rewards than Visa or MasterCard cards. If a retailer doesn’t accept American Express (often because of its higher charges to retailers), then I use Visa or MasterCard instead.

If I pay with a 1% cashback credit card, then I pay only 99% of the transaction amount. If I receive points or airmiles instead, the value of those points or airmiles is often more than 1%.

My points, airmiles and cashback are subsidised by those who pay by debit card. I don’t understand why people pay by debit card as it costs them 100% of the transaction amount instead of paying 99% with a 1% cashback credit card.

It is important to use credit cards solely as a means of payment and never as a means of borrowing. This means that balances should always be paid in full.

Robert G says:
9 June 2013

The Bridgewater Hall (concert venue) in Manchester charge 2% for card transactions when purchasing tickets even if this is a debit card used face to face at the box office.

This seems unfair when most people prefer to pay by card these days, as evidenced by your survey.

Is it legal ?

No, this has been illegal since 6th April 2013 as it now breaches the Consumer Rights (Payment Surcharges) Regulations 2012 which state “A trader must not charge consumers, in respect of the use of a given means of payment, fees that exceed the cost borne by the trader for the use of that means“. It costs a retailer a fixed fee of around 20p to accept a debit card payment, so a surcharge of 2% is much higher than it costs the retailer. If you pay the 2% surcharge, you are entitled to a refund of it under Regulation 10(b).

I use two credit cards. One from the 1st of the month to the 17th, the other from the 18th to the end of the month. Payment dates for each are set to maximise the interest-free credit period. They’re both cashback cards, too. Yes, yes, I’m mean and stingy when it comes to banking, but it’s a small step towards tipping the scales back in MY favour.

Plastic cards and how you pay have nothing to do with budgeting (or impulse buying). Common sense with just a little will power is what matters.

I do 99.99% of my shopping online so always use my cashback credit card, then make sure its paid off in full at the end of the month!

If the bill in a shop is less than £20 I always pay by cash. Over £20 I normally pay by debit card for normal household expenses or credit card for non-household purchases.

If I am spending over £100 I use my credit card so that I get section 75 protection.

On-line I always use a credit card.

Melanie Giles says:
20 June 2013

I tend to use credit cards for just about everything because of the rewards, convenience and security. However, there are benefits to using both. There is one main consideration to always keep in mind: If you use a credit card for a purchase, will you pay off your balance in full each month? Your answer to this question will go a long way to helping you determine if you should use cash or credit on your next purchase.

Simon says:
24 June 2013

If I buy items that I know I may exchange (clothes, DIY items) I try to pay cash – easier to get money back, saves a queue behind you. For items where I want some fall-back guarantee, I use a credit card, otherwise I may use a debit card (overall I try to avoid credit cards). At supermarkets, I try to pay cash, I do not want them to analyse all my purchases!