Keeping control of your finances can be a slippery issue but sometimes it’s not the big questions on investments and insurance that we want answers to.
If you want a Finance 101, we have the answers to three questions you may be curious about, but didn’t know where to look for help.
1. Do I need to keep my receipts?
From buying a newspaper at the corner shop to doing the weekly grocery run, you can’t seem to be able to go anywhere without getting one of those little pieces of paper. But do you need to keep hold of them?
The first thing to remember is that receipts do have many uses. They can help you return items, double check money going out of your account, and even budget correctly.
Keeping records of your financial outgoings is a good habit to get into as it helps you avoid going overdrawn and being hit by charges. It also means you have the paperwork you need if something goes wrong. So before you do throw them away, consider what you may need them for.
Checking statements and receipts and reporting anything that’s not right and shredding any documents you no longer need could help protect you against identity fraud.
2. If I give my account number and sort code to someone, can they defraud me?
Generally, your salary, benefits and other payments are paid automatically into your account using a system called BACS (Bankers’ Automated Clearing Services) or CHAPS (Clearing House Automated three digit Payment System) – using your account number and sort code.
There may be other times you need to give your account number and sort code for one-off payments into your account if a company or individual owes you money. But should you feel queasy giving these details over?
Account numbers and sort codes can form part of the puzzle of your financial identity – but they are puzzle pieces, rather than the whole puzzle itself. You do not need to give out the long card number on your card, or the three digit security number on your card, to receive money into your account, so be wary if anyone asks for this information to send money to you.
If you are worried, you could reduce your risk by avoiding writing down your sort code and account number – and if you do really need to, think of tricks to minimise your risk like sending part through an email, and part via text message.
3. What’s the difference between a debit card and a credit card? What should I be using for what?
The best way to remember what each card does is to consider that credit cards allow you to borrow and pay back later, while debit cards let you spend money you already have, or within an agreed overdraft facility. You need to watch out for fees here though.
Credit cards give you greater protection if you buy something that costs between £100 and £30,000 – thanks to Section 75 of the Consumer Credit Act, the card company is jointly responsible with the retailer or trader for any goods or services supplied. They also give you greater protection from fraud.
So if you’re buying something where it would be useful to have protection – flights, for example – and you know you can afford to pay it off, a credit card could be a good option.
You should remember though that ifyou can’t pay them off, you can easily find yourself paying hefty interest.
Debit cards are good if you think you may have trouble paying back borrowed credit. However, you should be aware that you have less fraud protection for faulty or damaged goods.