Completing Transactions

IMPORTANT FACTS- Plastic cards

VIDEO- This four minute video quickly explains the difference between debit and credit cards.

IMPORTANT FACTS– These cards only let you spend money if you already have it, or if it is part of an agreed overdraft.  

(note to phone users: you might need to rotate the display on your phone to be able to see this)

 What is it? Who is it for? Advantages Disadvantages
Debit cards Direct link to bank account-spent money is deducted immediately. Anyone with a standardUK current account – Can arrange agreed overdraft (over 18s)-Some fraud protection – Can be charged for going overdrawn- Not as much fraudprotection as credit cards-Can be high charges forusing overseas
Pre-paid cards Bit like a gift card- top up with moneyand only spend up to that amount Travellers with holidaymoney & anyone withoutnormal bank account including those with poor credit rating– Safer than cash- Cancel card if lost/stolen – Not accepted everywhere-Fees for using/topping up

IMPORTANT FACTS– cards that let you borrow money and pay it back later

 What is it?Who is it for? Advantages Disadvantages 
Credit Card Run up a bill to an agreed limit & pay it afterwards, usuallyonce a month on a particular payment date.Those with very organised financeswho are over 18 years old. -Protection against fraud- Extra protection for goods/services between £100 and £30,000- Easy way to pay for unexpected expenses- No interest if pay back in full each month – Risk of spiralling into debt – Paying bill with DD needsmoney to avoid going overdrawn.-Hefty interest on borrowed money
Store cards Type of credit card that can only be used in one chain of shopsPeople who spend a lot in a particular store – Deals & discounts in store – No interest if you pay bill in full each month– Very high interest rate if run into debt 
Charge cardsLike credit cards but you have to pay balance off every month.People on high incomes or for business use– No spending limit- Extra perks-Very high fees if you don’t pay the bill and the card may be cancelled

IMPORTANT FACTS Cash-like payments


  • cheques are used to send money or pay one-off bills. 
  •  You just fill in the details of your payment in your chequebook and give the cheque to the person you’re paying, or send it in the post.
  • They then pay it into their bank or building society account.
  • Cheques can take four-six working days to clear.
  •  Some businesses may not accept cheques as The Cheque Card Guarantee Scheme was withdrawn in 2011.
  • Cheques should only be accepted from trusted sources as it is difficult to get the money if they are fake and/or the person doesn’t have enough money in their account.

TRIVIA-  A number of banks and building societies have started to utilise photo clearance technology to process cheques. This allows users to take photos of their cheques to deposit them into their account within 24 hours, without the need to visit a branch! Some of the organisations using this technology include: 

Lloyds, Barclays, Bank of Scotland, Halifax and Nationwide. 

(It is worth noting: Lloyds, Halifax and Bank of Scotland all operate under the HBOS license. HBOS is a subsidiary of Lloyds Banking Group).

Image result for photo cheque deposit

Banker’s Drafts

  • Getting a banker’s draft is like asking a bank to write a cheque for you – you give them your money, and they give you a cheque for that amount to give to the person you’re paying.
  • The good thing about banker’s drafts is that they do not bounce through lack of funds.
  • They’re often used for larger amounts and when people or organisations wouldn’t accept a personal cheque.
  • You normally need to give your bank 24 hours’ notice to prepare a banker’s draft and there is likely to be a charge for the service.
  • Remember: banker’s drafts aren’t guaranteed against fraud. If you lose one or it’s stolen, someone else could use it fraudulently. Always ask your bank to check the draft – this can sometimes be done by telephone.

TRIVIA- cheques were going to be phased out by 2018 in the UK but there was such widespread criticism that they will now be in existence for ‘as long as customers need them’. The full story is here. Cheque use fell to its lowest rate in 2007, when they accounted for only 6% of non-cash personal transactions.

IMPORTANT FACTS- Phone and online bank transfers

  • You can transfer money directly to someone else’s account on the phone or online. You just need their account number, sort-code and payment reference e.g. name or customer number
  • It’s fast – payments usually arrive the same business day
  • It’s usually free
  • It’s flexible and safe
  • All account details should be double checked to make sure the right person receives the money. If the account details are correct and the money doesn’t transfer then the banks will investigate for free.
  • The system is called CHAPS (Clearing House Automated Payment System) and is how money is received directly from another personal account. 
  • Salaries, benefits and other payments are usually paid into accounts automatically either using CHAPS or BACS (Bankers’ Automated Clearing Services)  

TRIVIA-  In the future, finger-vein technology may be used to allow people to access and authorise payments on their accounts. You can read more about it here.