Next time you are faced with the option of paying by credit, cheque or savings using your plastic card, think carefully, because it could save you money.
If your card is linked to several accounts, it is particularly important to press the correct button. Let’s say your card is linked to both a credit card and a transaction account: if you select credit, chances are the merchant will add a surcharge to the purchase price or even limit how much you can spend on credit, according to Finder.com.au.
In addition, if you fail to pay your credit card balance on time, you will incur interest.
On the flip side, the comparison site lists some advantages to using credit:
- If you are not sure that you have sufficient funds, using credit means you can still make your purchase without being declined
- The credit card provider offers ‘chargeback’ protection making it easier to obtain a refund under certain circumstances
- All your purchases are monitored by the provider to ensure no suspicious or fraudulent activity has taken place.
Using the savings or cheque option does not come with the same protections.
But if you do not have sufficient funds in a savings or cheque account, the transaction will be declined, saving you from spending money you don’t have.
Some debit cards also have a credit facility. If you want to use your own funds in order to avoid paying interest in the future, ensure you press savings or cheque rather than credit.
If yours is a debit card and you choose to purchase using payWave, the funds will come out of your savings or transaction account.
But if you have a credit facility linked to your card, using payWave will force the purchase to be debited to your credit account, regardless of whether you have a savings or transaction account linked to it.
And again, unless you pay your balance on time, this option will attract an interest charge.
Which account do you find the most versatile for shopping? Have you ever been slugged by interest because you thought you were using your debit rather than credit facility?
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