Are Credit Cards Taking Over as a Preferred Payment Method?

In 2005, for the first time ever, the amount of purchases made on plastic cards outstripped the amount of purchases made using cash in the UK. We're going right along with a trend here - the UK is not the only country that posted more sales on credit than in cash last year. The question these days appears not to be 'are credit cards taking over as a preferred method of payment?' The answer to that appears quite clear, given the statistic. Rather, the question should be WHY are credit cards taking over as the payment method of choice among UK consumers?

The answers to that question are complex and many. The financial soothsayers would have us all believe that we've become a nation of profligate spendthrifts driving ourselves into the depths of debt - that UK consumers turn to credit cards in order to satisfy whims, driven by the merciless flogging of the 'don't put off till tomorrow' adverts all around us. That answer is not only too easy, but almost insulting with its implication that UK consumers are a herd of dumb sheep who can't be trusted to make their own financial decisions concerning credit cards.

In reality, there are some excellent reasons that UK buyers are burning up the plastic with credit card purchases. They range from convenience to safety to protection to ease of making purchases overseas. Why DO we choose paying by credit card more often than digging the change out of our pockets?

1. It's convenient - and getting more so every day.
   With a credit card, there's no need to keep making trips to the ATM or the bank. There's no concern about having the wrong change, or being a few pence short of a purchase you want. You can simply hand over your card and have it charged - then pay up at the end of the month. And as more and more shops and merchants accept credit card payment, it becomes far easier to pay for nearly everything that way.
   
2. It's safer than carrying cash.
   And Chip and PIN makes it even safer. If you lose your wallet with a wad of cash in it, you've said ta to it. It's unlikely that your cash will ever be recovered and returned. Not so when you lose your credit cards. It can be inconvenient for a short time but you won't be liable for a penny of any charges made on any one of your credit cards if they're lost or stolen.
   
3. Using a credit card for a purchase gives you protections you don't get with cash.
   Section 75 of the Consumer Credit Act gives you extra protection when you pay by credit card. If you make a purchase between £100 and £30,000 with a credit card, you can recover the full amount of your purchase from the credit card issuer if the goods fail to arrive, or are damaged or defective when you get them home. Even if you only pay a deposit on the goods with your credit card, you can go to the card issuer for the full amount of the purchase and let them worry about getting repayment from the manufacturer or merchant. And that's outside of protections offered by many card issuers as insurance of your purchases.
   
4. It can be easier and more convenient when shopping abroad.
   The tradeoff, though, is that you will likely pay a currency conversion fee if you use your credit card to charge a purchase overseas. Some cards don't charge this, though, and for some people the small charge is worth the convenience of not having to convert the currency themselves.
   
5. Buying by credit card can be a good way to keep tabs on your spending.
   It's contrary to what many finance experts will tell you, but you may find yourself spending LESS when you choose to pay by credit card rather than cash. It's not the big purchases that kill us - it's the little ones that add up. It's always been easy to lose track of what you're spending when it's just a few pence here and there out of your pocket. When you start paying out by credit card, you've got a ready record to exactly where your cash goes.

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