You can pay for products and services in a range of ways and the form of payment can be selected to suit the circumstances.
As with making payments using most methods you need some forward planning so the best arrangements are already in place.
This is often easiest particularly for small amounts. Legal tender is the coins and notes issued in UK including Scottish notes and must be accepted in normal circumstances. Retailers are not obliged to take large volumes of coins.
Make sure you get and keep your receipt if you pay with cash, there is no other trail.
Check your change and use cash as a way of controlling how much you spend.
If cash is lost or stolen it is gone for good.
Never send cash in the post.
Cheques draw money from your bank account (as long as you are over 16).
You write the name of the person or company you want to pay, pass it to the and they send it to their bank. Your bank should then only send funds from your account to that named person. This makes cheques a safe method of payment for use with the post.
You must have money in the bank or an agreed overdraft, or the cheque will ‘bounce’ and be dishonoured by your bank.
Some businesses like petrol stations wont take cheques because they do not want to wait for the banks to clear the money (at least 5 days.)
Cash & Debit Cards
These plastic cards allow you to draw cash from ATM’s and make immediate tranfers from your bank to someone elses account.
You get a pin number to authenticate your payments. Keep it safe and do not let anyone use your pin.
New intelligent debit cards are progressively being upgraded to allow a contact-less swipe payment for small items similar to the Oyster card used for London transport.
Credit & Store Cards
These are really ways of borrowing money for goods and paying later. Your supplier sends the bill you your credit card company who then collect from you.
Typically you will be given a credit limit and if you pay the full amount as soon as required you should not be charged interest.
Most Credit cards can be used all over the world but developing countries will have fewer more widespread facilities.
Store cards are similar to credit cards but aimed at getting you to spend in one store or chain.
Direct debit is an agreement between a supplier, you and your bank that allows the supplier to take the money from your account in varying amounts, subject to controls.
They are often used for utility bills that vary each period. You may get a discount on the bill for using direct debit because it is far cheaper for the supplier.
This is a very easy way of making payments but check your bills and statements carefully.
Standing orders are similar in that you agree with your bank to make regular payments to someone without further instruction EG making a saving deposit.
Both these methods help you to remember to make payments when due.
Electronic Transfer & Internet Banking
You can bank online or by phone making payments by instructing your bank via the internet rather than the paper based cheque system.
Payments are easy and instant but take security very seriously.
Paypal is a variation on a payment method that is only available via the internet.
The hardest thing to teach about ‘money matters’ is that it does.