Martin Lewis issues warning to people who use debit cards over credit cards to make payments
Martin Lewis has issued a warning to anyone who makes payments with a debit card rather than a credit card.
The money expert shared his advice on a BBC podcast explaining why debit cards can sometimes have higher charges than credit cards.
He said: “Many people think credit cards are bad and debit cards are good, but it’s not that simple.
“If you’re overdrawing, a debit card is also a debit card and a typical high street overdraft has 40 per cent annual interest compared to a high street credit card with 25 per cent annual interest,” he added.
Mr. Lewis explained that due to these higher interest rates, it may be cheaper to pay off credit card debt via a debit card, but stressed that it is better to have no debt at all.
Credit cards also offer extra protection under Section 75, a consumer protection right under the UK’s Consumer Credit Act 1974 that makes the credit card provider jointly liable with the supplier if something goes wrong with a purchase.
Mr Lewis said on the podcast: “If you’re buying something that costs over £100, up to £30k, and you pay any part of it, even a penny, by credit card, the credit card company is liable for the entire amount and is jointly liable with the retailer.”
“So if something goes wrong, you can go back. With debit cards, you just get a refund.”
Additionally, the personal finance expert explained that credit cards offer rewards for use, such as cash back.
He said: “With a credit card, you can also get rewards on your spending – up to 5 per cent cashback for a few months and up to 1 per cent on a regular basis.
“For many people, this is often a better way to spend than a debit card, as long as you pay off your credit card in full each month and choose the right credit card.”
