Martin Lewis issues warning to people who use debit cards over credit cards

The personal finance expert explained why credit cards are not always ‘bad’

Martin Lewis has issued a warning to anyone who uses a debit card instead of a credit card to make their payments.

The money expert shared his advice on his BBC podcast, explaining why debit cards could actually sometimes have steeper charges than credit cards.

He said: “Many people tend to think a credit card’s bad, debit card’s good, but it just isn’t that simple.

“If you are overdrawn, a debit card is a debt card too, and a typical high street overdraft is at 40 per cent annual interest compared to a high street credit card at 25 per cent annual interest,” he added.

Mr Lewis explained that because of these high interest rates, it could be cheaper to pay off debit card overdraft rather than credit card debt, but stressed it’s better not to have debt at all.

Credit cards also offer extra protections under Section 75 – a consumer protection right under the UK's Consumer Credit Act 1974 that makes a credit card provider jointly liable with a supplier if something goes wrong with a purchase.

“If you are buying something that costs over £100, up to 30 grand, and you pay for any of it, even a penny of it, on a credit card, the credit card company is liable for the entire amount and jointly liable with the retailer,” Mr Lewis said on the podcast.

“So, if something goes wrong, you can go back to it. On debit cards, you only get charged back.”

In addition, credit cards offer rewards for using them, such as cash back, the personal finance expert explained.

He said: “On a credit card, you can also get rewards on your spending, cash back of up to 5 per cent for a few months and up to 1 per cent on a regular basis.

“Then for many people, done sensibly as long as you’re paying your credit card off in full every month and you’ve chosen the right credit card, it’s often a better way to spend than a debit card.”