Plastic money
When we buy things, we pay for them in lots of different ways. We can hand over cash, write cheques or use a plastic card such as a debit or credit card.
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Plastic cards are now the most popular way to pay for things. They’re easy to Use, and as well as using them in shops we use them to pay over the phone or on the Internet. We also use them to get cash out of the bank.
There are lots of different sorts of plastic cards…
- Cash card. This is the simplest card. You can’t use it in a shop to buy anything. Instead, it allows you to take money out of a cash machine, and most banks set a daily limit on what can be withdrawn. See the section on using cash machines on page 30 for more information.
- Debit card. A debit card lets you use money direct from your bank account without having to take out cash. You hand it over at the checkout and the money is taken straight out of your account, providing you give them your Personal Identification Number (PIN). You can usually use your debit card at cash machines as well, enabling you to take out cash when you need it. Some machines charge for using their service, but they will warn you before dispensing the money.
- Prepaid cash cards. You can use a prepaid cash card in the same places as a credit card. The difference is that you don’t get a bill. Instead, you load money onto your card in much the same way that you load credits onto a prepaid mobile phone. If you lose your card, as long as you report it, you don’t lose the money loaded onto it. Rented property often has meters which require this sort of card to pay for electricity or gas. As there is no credit score required when applying for one of these cards, it means that young people or those usually rejected by card companies can now get the same discounts as everyone else by buying online. They are also widely accepted as a form of payment in the UK now.
- Credit card. You use a credit card in the same way that you use a debit card. The two big differences are that: the money you spend isn’t taken out of your account; and interest is charged straight away on any cash you withdraw using your credit card. The credit card company keeps a list of everything you spend and turns this into a bill, which they usually send at the end of the month or you can access online. If you don’t pay back all you owe, you get charged interest on the outstanding amount. That means the amount you owe will get bigger and bigger. While credit cards are convenient and let us buy things before we actually have the money to pay for them, it’s easy to get into debt using credit cards.
- Store cards. Some shops have their own cards, called store cards. They are like credit cards but you can only use them at the shop or store group that has issued them. You’re often asked if you want to apply for one when you’re paying for something at the checkout. Most store cards have a very high rate of interest, which can make your bills mount up quickly if you don’t pay back everything you owe straight away.
Store loyalty cards and store-linked credit cards can be confusing. It is very important not to confuse store cards with store-linked credit cards. Store-linked credit cards can be issued by a high street store for use anywhere and operate in just the same way as any other credit card, but may have the extra attraction of gaining you loyalty points if you use this type of credit card in a specific store or store chain. Loyalty cards do not provide you with any form of credit. A loyalty card allows you to gather points at a specific store or store chain, which can be spent on goods or services when enough points have been saved.
Cheques
When you or your family opens a bank account, you may get a cheque book and cheque guarantee card to allow you to pay for things without using cash. You can write out a cheque to the person or business that you are paying and hand over a cheque guarantee card. This guarantees that they have enough money in your account to pay for what you are buying. Cheques are now used less and less as plastic cards become more popular and a faster and safer means of moving money, and the guarantee cards are being phased out. Many stores, filling stations and other retail outlets no longer accept cheques.
Ex-offenders who are opening new basic bank accounts will not be offered a cheque book or cheque guarantee card. Details on how to complete a cheque can be found on this useful interactive site: www.moneymatterstome.co.uk/Interactive-workshops/WritingCheque.htm
Chip and PIN
(Personal Identification Number)
These days, plastic cards come with a Personal Identification Number (PIN). This is a four-digit number that will be sent to you by your bank, building society or credit card company. It’s really important to learn this number rather than carry it about with you or to change it to a number you will remember. You can do this at a cash machine. Whatever number you use, you need to make sure that no one else knows it, because if they do, they can get hold of your money.
We use a PIN to get cash out of cash machines and for purchases made in places such as shops and restaurants. You’re asked to put your card into a small machine at the checkout and punch in your PIN.
The ‘Chip’ is a microchip embedded in all cards;
it holds your personal account details. If the card becomes damaged,
it will stop working.
The ‘Money Matters to Me’ website has a Chip-and-PIN simulator to help you learn how to use your cards. You’ll find it at: www.moneymatterstome.co.uk/1-What-money-is-and-money-exchange/Sub1/ChipAndPin.htm
Cash machines
Cash machines are the machines we use to take money out of our accounts. They are really called ATMs, which stands for Automated Teller Machines, but most of the time you hear them called cash machines, cash points or even the ‘hole in the wall’. You find them set into the wall outside banks and building societies and also in stations, post offices and supermarkets.
To use a cash machine, you’ll need a plastic card such as a cash card, debit or credit card and your PIN. Then you just put your card into the slot in the machine and follow the instructions on the screen. Some companies charge you to use their ATMs. A message will be displayed on the screen and you have a choice to carry on with the transaction or withdraw your card. 
As well as taking out money, you can often do other things at cash machines such as pay in money, pay bills and find out how much money is in your account.
Key points to remember
- Don’t stand close to anyone using a cash machine and make sure no one stands close to you. This is because you need to keep your PIN private.
- Be cautious if strangers offer to help you at a cash machine, even if your card is stuck or you're having difficulties. Don't allow anyone to distract you.
- Some cash machines charge you for taking out money while others are free. If you want your money to go further, stick to the free ones.
- If you take cash out using your credit card, you will be charged interest straight away. With a debit or cash card, as long as you have money in your account, you won’t be charged interest.
- Ask for a receipt when you take out cash so you can remember how much you’re spending and have a record of it.
- Always double-check that you haven’t left your card, cash or receipt in the machine.
- Put your money, card and receipt away immediately without drawing attention to the fact that you are opening your purse or wallet.
- Cash machines sometimes get tampered with by people trying to steal your card details and money. If the machine looks unusual or suspicious; for instance, if something has been stuck onto the card slot or key pad, do not use it. If you have started your transaction cancel it, remove your card and walk away. Do not remove suspicious devices but do call the police or go into the shop or bank and let them know what you have found.
To have a go at using a cash machine, visit the ‘Money Matters to Me’ website. It has a simulator that you can practise with. You’ll find it at: www.moneymatterstome.co.uk/Interactive-workshops/ATM.htm.
Identity theft happens when someone steals your name and personal information to commit fraud. They might do this by running up credit card debts in your name or using your information to take out loans. Unfortunately, it is one of the UK’s fastest growing crimes. It can cause real problems in our financial lives, particularly for people on low incomes who don’t have money to fall back on.
There are a number of steps you can take to protect yourself.
- Take care of your personal details, don’t just give them to anyone.
- Rip up or shred personal documents including envelopes that have your name, address or any personal information on them before you throw them out.
- Don’t give out personal details over the phone, by email or to someone who calls at the front door unless you are absolutely sure you know who you are dealing with.
- NEVER give out your PIN to anyone.
- Your bank or building society won’t send you emails asking for personal information, especially your PIN, so if you receive any, they will be false – delete them.
- Take special care online.
- If you bank, book tickets or shop over the Internet, do not use the same passwords for all your accounts or store details on a computer.
- When shopping online look for the padlock icon and https:// (in the web page addresses) – this means the site is secure. THE LOCK ICON IS NOT JUST A PICTURE! Click (or double-click) on it to see details of the site’s security. This is important to know because some fraudulent websites are built with a bar at the bottom of the web page to imitate the lock icon of your browser. Therefore, it is necessary to test the functionality built into this lock icon.
Home computers
Ensure your home computer is protected before you go online by buying a good anti-virus, firewall and anti-spam software package and keep it up to date.
Chip and PIN
Shield your number from those people who are nearby, using your hand or body; don’t use the same PIN for all your cards; and destroy old plastic cards when you receive new ones.
Check your statements
Bank and credit card statements need careful and regular checking to pick out any unexpected purchases or withdrawals. Query any strange transactions straight away and also report these to the police. The bank won’t do this on your behalf, but they will look into where the money has gone and replace it if fraudulent practice is proved.
Moving house or flat
You are more at risk when you move home so redirect all your mail to your new or a safe address and inform your bank, utility companies and other organisations of your new address.
Where is your post delivered?
If you use a central or communal postal-delivery point, such as in a block of flats, make sure you have a lockable post box and collect your post as soon as possible.
If your mail regularly fails to arrive, report this to Royal Mail, or if a new plastic card is expected and is not received within a reasonable time contact the issuing company.
Report it
If you are a victim of fraud, report it to the police straight away. They will give you an incident number. Report a missing or stolen card to your credit card company straight away.
Check your credit rating
Our section on your credit history explains how to do this.
