Depending on your age and type of current account, you will likely have been given a cash card or a debit card from your bank or building society.
What’s the difference between a cash card and debit card
A cash card will only allow you to make a withdrawals from a cash machine. A debit card will offer the same facility but can also be used to pay at a till, online or by phone.
| Cash Card | Debit Card | ||
| Withdraw cash from a cash machine | Withdraw cash from a cash machine | ||
| Pay at a till | Pay at a till | ||
| Pay online | Pay online | ||
| Pay telephone | Pay telephone |
How do they work
When paying by cash or debit card, they money will be immediately withdrawn from your bank account. A cash card will not let your spend exceed the cash available in your bank account. However, with a debit card there may be a facility in place such as an overdraft what will allow you to spend more cash than is available. It is like paying by cash but safer as it is easy to cancel the card if it is lost or stolen. Depending on the card provider, you will be given a small amount of fraud protection. When using your card, at a cash machine or till you will be asked to type in your PIN code unless you are using contactless to pay.
What are contactless payments
Some debit card will allow you to make payments of up to £30 without using a PIN code. You just need to hold your card against a card reader, this is known as contactless payment. The symbol below will indicate if you can pay by contactless.
Types of card
| Visa Debit | |
Be aware that these logos will also appear on credit cards so make sure you are using the correct card as withdrawing cash from a credit card will incur additional fees.
The pros of a debit card
- Convenient to carry one card rather than a wad of cash.
- They are generally accepted almost everywhere in the UK.
- Safer than cash. If they are stolen, it can be immediately cancelled.
- Some cards might offer cashback rewards and other benefits.
- Can shop online.
The cons of a debit card
- You can’t borrow money like a credit card.
- If you spend into your overdraft, it might cost as high as 40%.
- You get less protection than a credit card so you may not get all your money back if anything goes wrong.
Charges and fees with debit cards
If you go overdrawn, you will have to pay fees and interest charges if an overdraft facility is available.
Most cash machines won’t charge for a cash withdrawal using a debit or cash card. Some private cash machines may apply a charge on a withdrawal transaction and should notify you prior to withdrawal.
Using the card abroad
When using cards abroad, the following should be considered when using a payment card:
- Conversion charges. Your bank may charge you for converting your money to the local currency when you withdraw cash abroad or when making purchase.
- Transaction charges. Your bank may charge you for handling the transaction when you withdraw cash or make a purchase.
Protection
If experience a problem when purchasing something on your debit card, you may be able to get your money back through the Chargeback scheme from your bank. For example, if you purchase a TV and the company goes bust before it is delivered, your bank may be able to refund you. You are not guaranteed to cover all if any of your money and relies on the bank being able to recover the money from the company you’re buying from.
Consumers get stronger protections when buying with a credit card as these rights are set out in law. Larger purchases will be better protected through a credit card. Section 75 of the Consumer Credit Act allows you to claim back money from your card provider if something where to go wrong with any purchases between £100 and £30,000.
