Credit? Debit? Cash? How I choose the best way to pay

How do you choose how you’ll pay? I expect most of you just whack it on plastic, or fish around for change – if you have any. For me the choice between cash, debit card and credit card is not so simple.

The way I pay is dictated by a few variables – from the place I’m spending money to the offers available to me.

In my head this all makes perfect sense, though I expect some of you might think it’s too much hassle! Even so, if you want to make or save money when you spend it, many of these methods will do just that.

When I use credit cards

There are a handful of reasons why I use credit cards, as I’ll go through below. However they count for nothing if I don’t pay off the spending in full each month before any interest is due. If you don’t think you can do the same, then avoid

To get cashback

American Express is usually my first choice. I get 1% back on every full pound spent on my Amex Platinum Cashback credit card, potentially going up to 1.25% if I spend more than £10,000 a year on it.

There is a £25 fee each year so I might change to a different Amex soon, but even so the cashback and additional offers make it my number one way to spend.

I love my Amex, but there are still places – on the high street and online – that won’t accept it. If this happens I use my TSB Platinum credit card. Again I get 1% back here, though this is capped at £5 a month (so £500 spend).

When I’m abroad

I’ll take some cash out in advance, but most of my spending abroad is through my Halifax Clarity card. There is no charge for using it, meaning you get the best exchange rates.

I’ve also just picked up a Monzo prepaid account which also offers fee-free spending – it’s always worth having a backup card!

When I’m buying something expensive

I’ll always use a credit card if I’m spending more than £100 on a single item. This is to take advantage of added protection if the company goes bust or your goods fail and you can’t return them.

You actually only need to spend £1 to get the protection.

When I use a debit card

Since I can get cashback via my credit cards, my debit card generally only leaves my wallet if I need to use a cash machine. But there are a couple of exceptions.

When I want to avoid a fee

Most retailers don’t charge for using a credit card, but a handful do – most notably airlines. It’s less likely there will be a fee for using a debit card, so I’ll use one to avoid the extra cost.

Fortunately, it looks like all fees for using cards will be scrapped from January 2018. Good news… unless the costs get passed on to us with higher prices.

When there’s bigger cashback to claim

A handful of my current accounts (I’ve got 11 in total) run occasional extra cashback promos. I don’t check these every time I shop, but I will take a look every few weeks or so to see what’s on offer.

For example, right now I could get 10% off at retailers as diverse as Etihad, Subway and National Express with my Halifax account. With my Natwest account there’s 7% off French Connection and 4% off at Toys R Us. Lloyds, Barclays and

If one of these has a deal for something I want, I’ll use the banking app to activate the offer. Rather than have all the cards on me, I’ve added them to Apple Pay. It’s not full proof – you still need contactless – but it helps keep my wallet slim!

When I use cash

It’s very rare that I’ll pay with coins and notes, even though they can be useful budgeting tool.

When I have to

My biggest use of cash is at a cash-only shop, bar or event.

Hopefully I’ll know in advance, but nine times out of 10 I have to run off to the nearest cash machine after my appointment so I can pay (it’s lucky they’re so trusting).

When there are minimum payments for card use

I don’t see this very often anymore, but from time to time I’ll go to bar and there’s a 50p charge for transactions under a tenner, or similar. I’m not going to pay that, even if I need to find a nearby cash machine.

When I leave a tip

The only other exception is tipping. As long as I have the change on me, I always prefer to leave actual cash rather than add it to a card payment. There’s no guarantee the waiter or waitress will get to keep it, but the odds are better.




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