Using and paying with debit cards

A debit card is the first payment choice for a lot of people who don’t like to pay on credit. You can take out cash at cash machines, use your card at the till, pay online and by phone.

How does a debit card work?

When paying by debit card, the money comes directly out of your bank account.

It’s like taking out cash and handing it over – but safer, because the card is easy to cancel if it’s lost or stolen.

You’ll also get a little bit of fraud protection – although not as much as you get with a credit card.

When you use your card in a cash machine or most shops, you’ll be asked to type in your PIN code. This is unless you’re using contactless to pay.

What are contactless payments?

Some debit cards let you pay up to £100 without using your PIN and multiple contacless payment of up to £300 before a PIN is requeseted. You just need to hold your card against a reader. This is known as contactless technology.

There’s a symbol that shows where you can pay in this way, and your contactless card will have one too.

If your debit card doesn’t have this feature, you might be able to ask your bank for one that does.

Contactless security

If you’re careful about how you use your contactless card, the process is generally quite safe.

However, as with most things, there is still some risk involved – and there are a few things you can do to keep your money safe.

Types of debit card

There are two main types of debit card that can be used wherever you see their symbols – Visa Debit (are the most common) and MasterCard Debit.

All debit cards are much the same, with a few small differences.

The pros and cons of a debit card

Pros
  • Easy to carry – one little card, compared with a wad of cash.

  • They’re accepted almost everywhere in the UK, and in lots of places around the world.

  • It’s safer than cash. If you lose your card, or it gets stolen, you can cancel it quickly and you shouldn’t be out of pocket.

  • You can use them to get cash, usually with no charge. Some cash machines will charge you, but they’ll let you know before you decide to go ahead.

  • With some debit cards, you might be able to get up to £50 cashback at the checkout when you use it to buy something.

  • You can shop online or over the phone, not just on the high street.

Cons
  • You can’t use them to borrow money. The money needs to be in your account, or you need to have agreed an overdraft with your bank.

  • The cost for using your overdraft might be as high as 40%.

  • You get less protection than you do with a credit card. So you might not get your money back if anything goes wrong. Some debit card providers offer a ‘Chargeback’ scheme, which means they might be able to get some or all your money back.

Charges and fees on debit cards

Overdrafts on debit cards

If you go overdrawn, you’ll probably have to pay fees and interest charges.

Cash withdrawals when using a debit card

Most cash machines won’t charge you to take out cash with a debit card. Those that do will tell you first and give you the chance to cancel if you want to.

If you use a cash machine abroad, you might have to pay fees. It’s best to check with your bank before you go. If the fees are too high, you might want to get a different card to use while you’re away.

Protection when using a debit card

If you have a problem with something you buy on a debit card, you might be able to get your money back from your bank under the Chargeback scheme. Some debit card providers offer this, and it means they might be able to get some or all your money back.

For example, if you buy a new sofa and the company goes bust before the sofa is delivered, your bank might be able to refund you.

Chargeback relies on your bank being able to get the money back from the bank of the company you’re buying from.

However, consumers get stronger protections when they buy using a credit card – as these rights are set out in law.

So, if you’re making a big purchase – such as a holiday or new piece of furniture – it makes sense to use your credit card to pay for at least some of the transaction.

You can claim back money from your card provider if something goes wrong with anything that you’ve paid between £100 and £30,000 for. And you only need to pay some of this on your credit card to get the full protection. 

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Whatever your circumstances or plans, move forward with MoneyHelper.

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Looking for us? Now, we’re MoneyHelper

MoneyHelper is the new, easy way to get clear, free,
impartial help for all your money and pension choices.
Whatever your circumstances or plans, move forward with MoneyHelper.

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