Methods of Payment

What is the difference between debit and credit?

Paying with debit is like spending cash, credit is like borrowing money.

What is debit?

You can only spend the amount in your account.

Helps to avoid debt, track daily spending and budget with cash.

What is credit?

You can spend up to your credit limit.

Helps to build credit, maximise rewards and get purchase protection.

What is cash as a method of payment?

Cash is also known as money, in physical form - it is accepted by all businesses however there can be issues with money being fraudulent, or becoming obsolete - 14% payments in 2023.

What are prepaid cards as a method of payment?

Money is ‘loaded’ onto a card, which can be used to make payments, reducing the card’s balance.

Who is likely to use prepaid cards?

Used by children or people who have been made bankrupt.

Also applies to travel cards.

What are electronic bank transfers as a method of payment?

Payment is paid directly from one bank account into another.

You can pay friends or businesses with this payment.

What is a cheque as a method of payment?

A written order to a bank to make payment from one bank account to another.

What are the advantages of using cash?

• Easy to carry.

• If you use it, it is all you lose.

What are the disadvantages of using cash?

• Easy to lose.

• Can be damaged easily.

• Can be outdated.

What are the advantages of using prepaid cards?

Can be used safely by children or people made bankrupt as cannot overspend.

What are the disadvantages of using prepaid cards?

If all used up, it cannot be continued to be used unless topped up.

What are the advantages of electronic bank transfer?

• Can pay friends or businesses with this immediately. Quick.

What are the disadvantages of electronic bank transfer?

• Scammers may take advantage.

• Older people may make accidents e.g. send too much money.

What are the disadvantages of a cheque?

• Takes 3 days to clear.

• Errors may occur when written, causing delays.

• Cheques may bounce if funds are insufficient.