Payment Methods

PLASTIC CARDS

• Debit Cards

When you use your debit card the money you spend is taken directly from your current (or in some cases, savings) account. As long as you have enough available funds in your account you can use your debit card to buy things in person, over the phone, by mail order and over the Internet. It also enables you to withdraw money direct from your account using a cash machine and may have a cheque guarantee function.

• Credit Cards

A credit card allows you to pay for goods and services with credit up to a limit agreed with your card issuer. You have to pay back what you borrow - the costs and terms and conditions will vary from card to card. Most credit cards give some period of interest-free borrowing for purchases so long as the bill is paid in full by the payment date.

CHIP AND PIN

Chip and PIN was introduced in the UK as part of a global programme to tackle increasing levels of plastic card fraud. Some people may have difficulty using a PIN due to a disability or impairment. If this is the case for you then you should speak to your card issuer about alternatives to chip and PIN.

See www.apacs.org.uk or www.choosingandusing.com for more information on debit or credit cards.

• Store Cards

A store card works in exactly the same way as a credit card, but can only be used for purchases made in a shop (or group of shops under the same ownership) associated with that card.

CHEQUES

Cheques operate within a clearing cycle known as 2-4-6 (or 2-6-6 for savings accounts). These set the maximum timescales (in working days) for when customers will start earning interest on the money paid into their accounts, when it will be available for withdrawal and when they can be sure that the money is theirs. Some banks and building societies will offer faster clearing timescales as part of their competitive offering to customers.

2-4-6 in action

Day 0 (for example, Monday) - When your bank or building society receives the cheque from you

Day 2 (Wednesday) – You start to earn interest on the money paid in (or reduce the balance on which overdraft interest is charged)

Day 4 (Friday) – You can withdraw the money (this happens on day 6 [the following Tuesday] for savings accounts that allow withdrawals)

Day 6 (the following Tuesday) – You can be sure that the money is yours by the end of today and will not be reclaimed (unless you are a knowing party to fraud)

See www.apacs.org.uk or www.chequeandcredit.co.uk for more information on cheques and the clearing process.

AUTOMATED PAYMENTS

• Direct Debits

A Direct Debit is an instruction from a customer to their bank or building society authorising an organisation to collect varying amounts from their account, as long as the customer has been given advance notice of the collection amounts, dates and frequency of payment. All banks and building societies that operate the Direct Debit Scheme are committed to provide the Direct Debit Guarantee for customers.

• Direct Credits

A direct credit payment is an electronic payment straight into a business or individual’s bank account. 90% of UK salaries are paid in this way and funds are cleared and available the day they are credited to the account.

• Standing Orders

A standing order is an instruction you give to your bank or building society to make payments, usually on a regular basis, to a specified third party’s UK bank or building society account. It takes three days for a standing order to reach the recipient’s account but following the introduction of the new Faster Payments ervice in May 2008 they will be processed on the same day.

• Faster Payments

Faster Payments is a new service that allows customers to make payments by phone or online banking that will reach the recipient account on the same day. The service is available 24 hours a day, 7 days a week. The service will launch in May 2008.

See www.apacs.org.uk or www.bacs.co.uk for more information on automated payments.