Understanding payment methods
There are various cards that allow you to access money and pay for goods or services. Discover the features of these cards and where you can use them here.
Debit cards
Use - To withdraw money from your account or pay for goods and services.
Where - At cash withdrawal machines (ATMs), in shops, or for online shopping.
Who - These can be used if you’re at least 11 years old.
Features -
Allow you to withdraw money from your bank account. Some shops allow you to get cashback. This means you can withdraw cash at the same time as buying items (you can only spend as much as you have in your account)
Allow you to withdraw currency from an ATM when you are abroad
From the age of 18 you can apply for an overdraft, which allows you to withdraw money even if you don’t have enough in your account. Banks will check your credit history first and you may be charged interest or get bank charges if you go over the agreed limit
Some debit cards are contactless, so you can pay for goods up to £30 by touching the card on a card read
Credit cards
Use - To pay for goods or services even if there’s not enough money in your account.
Where - Shops, online or ATMs (you can withdraw cash).
Who - You have to be at least 18 years old to apply for this type of card and must pass credit scoring.
Features -
You can spend money that you don’t have, but you’ll pay interest if you don’t pay it all back within an agreed time
If you withdraw cash you’ll be charged interest and a handling fee
Interest rates can be high, so manage your credit card use carefully
Allow you to withdraw currency from an ATM when you are abroad
Late or missed payments can affect your credit rating
Store cards
Use - To pay for goods or services in a specific shop.
Where - In shops or online.
Who - People aged 18 or above who pass credit scoring when applying
Features -
You can spend money that you don’t have, but you’ll pay interest if you don’t pay it all back within an agreed time
Often high interest rates, so use store cards carefully
Operated by finance companies on behalf of the store
Late or missed payments can affect your credit rating
Charge cards
Use - To pay for goods or services even if there’s not enough money in your account.
Where - In shops or online.
Who - People aged 18 or above.
Features -
The balance needs to be paid at the end of each month
Non-payment can mean high charges or the card may be cancelled
You pay an annual fee for this type of card
Late or missed payments can affect your credit rating
Pre-payment bank cards
Use - To pre-load money onto a card to pay for goods or services.
Where - ATMs, shops or online.
Who - People aged 18 or above, but some cards are available for younger people (not offered by all banks).
Features -
You put the money ‘on’ to the card in advance, it cannot be used otherwise
You don’t always need a bank account
There’s generally a charge to apply for or use this service
Foreign currency cards
can be used instead of taking cash or travellers’ cheques abroad
Smart cards
Use - To pre-load money onto a card to pay for certain goods or services.
Where -In specific places e.g. for transport, food in school canteens, at PayPoints or for mobile phone top-ups.
Who - Depends on the use e.g. a mobile phone ‘top-up’ card needed for pay-as-you-go phones.
Features -
You put the money ‘on’ to the card in advance, it cannot be used otherwise
Re-charged at designated places only, sometimes online
No need for a bank account
Various services use these cards, e.g. mobile phones, transport, gas, electricity and even some schools and universities
Gift and voucher cards
Use - A card pre-loaded with a set monetary value, used instead of cash.
Where - In shops or online, but with specified retailers only.
Who - For use by anyone.
Features -
Sometimes pre-loaded with an amount or sold as a set amount
Some gift or voucher cards can be reloaded, but not all
No bank account necessary
Allows people to choose what they buy
Sometimes have a scratch panel with a voucher number
May have an expiry date
If a company closes before you use them, you won’t get your money back.
