Christmas Shopping: Find Out The Best Ways To Pay | Money

Buying party favors was so easy, but the march of technology, Covid and other factors turned things upside down and led to a dizzying array of payment options.

Buy something from the Boohoo fashion website, for example, and you can choose from seven ways to pay: credit and debit cards, PayPal, Amazon Pay, and four different “buy now, pay later” companies.

But in some cases the payment methods are removed. Earlier this month, Amazon announced that it was banning people from using UK Visa credit cards from January 19. And when it comes to physical stores, Covid transmission concerns mean some are avoiding banknotes and coins.

Here we take a look at the pros and cons of the different payment methods.

Credit card

A big plus is that you usually get up to 56 days of interest free credit from the time of purchase. However, some vendors offer new customers 0% interest on purchases for up to 23 months. Some credit card holders never pay interest because they pay off in full each month.

Using a credit card for large purchases provides protection in the event of a problem. Under Section 75 of the Consumer Credit Act, if a retailer goes bankrupt or does not deliver the goods as promised and the items cost between £ 100 and £ 30,000, the credit card company is “jointly and severally liable”. So if you buy a large item and the retailer goes bankrupt, the card company should cover the cost.

On top of that, some credit cards offer decent rewards like cash back, airline miles, or coupons. American Express’s Platinum Cashback Everyday card currently offers new customers 5% cashback on purchases for the first three months (up to £ 100).

But, as the government website MoneyHelper says, if you only make minimum payments or rack up a bill that you can’t pay off, “credit cards can be expensive and can spiral into debt.” . Many charge more than 20% interest. You could also damage your credit score.

Debit cards

With these, the money comes straight out of your bank account. The protection you get is not as good as that offered by credit cards, although some banks do offer something called chargebacks, which means they might be able to recover some or all of it. of your money in case of problem.

Some banks offer expense rewards: for example, the new digital bank Chase is offering its current account holders 3% cashback on Amazon.co.uk expenses until December 31. It was already offering 1% cash back on all qualifying debit card spending for 12 months.

If you use a debit card, the money comes straight out of your bank account. Photograph: Chris Radburn / PA

Store Cards

This is a form of credit that you can only use to pay for items at a particular retailer or group. There are still a few offered by retailers like Argos. Interest rates are often quite high: Argos has a representative APR of 34.9%, for example.

Buy now, pay later

These services allow you to delay payment for an item with no interest or fees, unless you don’t pay back on time, in which case some companies charge late fees.

The three main BNPL companies are Klarna, Clearpay and Laybuy. Klarna allows buyers to “pay in 3,” where the cost is split into three equal interest-free payments, the first made immediately and the next two 30 and 60 days later, or they can pay in 30 days. With Clearpay, you can pay in four bi-monthly installments, and with Laybuy, it’s six weekly installments. PayPal and digital bank Monzo have also launched their own BNPL services.

Klarna doesn’t charge late fees, but others like Clearpay do. There have been allegations that those who fall behind in their payments incur more than just debt – some say they have seen their credit scores go down, while others believe they have been turned down on charges. loans after missed repayments.

Pay Pal

PayPal app on a phone
Many retailers allow people to pay online through PayPal.
Photograph: Thomas White / Reuters

Many large and small retailers, including John Lewis and Marks & Spencer, allow people to pay online through PayPal. It offers a “buyer protection” program covering all qualifying purchases which entitles you to a refund of the full price plus shipping charges when you do not receive your item or it is not what you are looking for. ordered. However, even if your PayPal account is linked to your credit card, you will lose the arguably stronger guarantees offered by Section 75.

Some retailers have Zettle payment terminals, which allow people to pay in-store with PayPal via QR codes.

Apple Pay

You can use it to purchase items in stores, on the web, and in apps – just add a credit, debit, or prepaid card to the Wallet app on your iPhone. You can add your card (s) to other Apple devices (Apple Watch, Mac, iPad) that you want to use with Apple Pay. Enthusiasts love that Face ID, Touch ID, or your passcode is required for purchases, arguably making it more secure than using a physical card, and your card number is not stored on your device or on Apple’s servers, or shared by Apple with retailers. It works in any physical point of sale that takes contactless, and you can use it to pay online in Safari or in apps when you see it listed as an option.

Google pay

It has a lot of similarities with Apple Pay. It allows you to make purchases in stores and on websites and apps. You download the app and add a payment method such as a credit card. If a physical store accepts contactless, you can pay with your phone. In apps and on websites, you can pay anywhere you see the logo. When you pay in stores, Google Pay does not share your card number.

Amazon Pay

If you have an Amazon account, you can use this service anywhere you see the Amazon Pay button, which includes online payments from many retailers. It uses the information and payment methods stored in your Amazon account. And you can use Alexa to pay by voice. It states that qualifying purchases of physical goods are protected by its “A-to-Z Guarantee”.

But activists have long urged buyers to boycott Amazon over its tax evasion, among other things.

Interest-free credit

This allows you to spread the cost over a set period (which can be as short as three months or as long as five years) via monthly payments. This is great if you stay up to date with your repayments, but if you don’t, you could be hit with interest and additional charges, and your debt could add up quickly.

Cash

Stacks of one pound coins on British pound banknotes.
The coronavirus pandemic has affected the use of cash. Photograph: Rosemary Calvert / Getty Images

Banknotes and coins are still hanging there despite the UK appearing to be rushing towards a cashless society. The benefits include the fact that you can’t fall into the red, know exactly what you’ve spent, and there are no hidden fees or interests. However, some places have stopped taking cash or never have.

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