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What’s the best way to pay?

The way we pay for goods and services has changed a lot over the years and while some of us still like to use cash where possible, there are a lot of other methods that can be used some of which offer you additional protection if something goes wrong.

Debit card

Some debit card providers operate a Chargeback scheme where you can ask them to reverse the payment should something go wrong. For example, the trader fails to deliver goods.

Credit card

Payments are protected by section 75 of Consumer Credit Act 1974 which makes your card provider jointly liable with the trader to refund you if something goes wrong. Only goods or services valued between £100 and £30,000 are covered but you can make a claim even if you only paid 1p on your card. This is useful for purchasing high value items, but you should try to pay the card off as soon as possible to avoid high interest rates.

Finance

There are different types of finance available including hire purchase, conditional sale agreements and fixed sum loans and they tend to be useful for buying high value items such as cars or furniture. Some types of finance will give you the option to hold the finance company liable if something goes wrong and you can’t resolve it with the trader. You should always check the rate of interest and what the total amount payable will be. Some offer 0% interest for a period of time but once this ends the rate of interest can be high, so if you can its best to pay the balance in full before this. For more information see buying on finance.

Direct debits 

Direct debits are used for making regular payments for services such mobile phones, TV and internet services. Customers are protected by the Direct Debit Guarantee and If a payment has been taken incorrectly then your bank or building society have an obligation to refund the payment.

Gift card/vouchers

These are generally used for giving gifts instead of cash, you decide how much you want to load onto the card and the recipient can then only spend to that amount. They provide no additional protection if something goes wrong.

You should beware of anyone asking you to make a payment by gift cards such as for iTunes, as this indicates a scam.

PayPal/Sage Pay

They both offer secure services that allow you to send electronic payments online. PayPal also offer a process where you can raise a dispute against a trader although there is usually a time limit in which to do so. Sage Pay don’t offer a dispute process.

Digital-wallets (apple/google pay)

These allow you to make secure electronic payments online or in person if you have a device that support it. As your credit or debit card is linked to the digital wallet, you may also be protected by section 75 or chargeback as outlined above.

Bank transfers

Bank transfers are a direct transfer of an amount of money from one bank account to another. While there is no obligation for them to do so, if you’ve been the victim of a scam you can ask your bank for help in getting the payment back

Store cards

Store cards operate in the same way as credit cards with many covered under the Consumer Credit Act 1974 so that your card provider is jointly liable to refund you if something goes wrong. It’s worth noting that interest rates for store cards can be higher than some credit cards so you want to pay off any balance as soon as possible.

Last updated: 28 March 2019

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