When Plastic Conquered The World!

When shopping, paying by debit card is now more popular than cash, as is paying by credit card. Get more from your plastic with these great deals.

When it comes to spending in retail outlets, cash is no longer king.According to banking payments association APACS, cash spending in shops slipped to £81bn in 2005, 4% lower than the £84bn recorded in 2004. On the other hand, UK retail and online spending on debit cards jumped by an eleventh (9%) to hit £89bn, from £82bn in 2004. Hence, in 2005, retail spending on debit cards exceeded cash spending for the first time ever.In total, we spent £240bn in online and offline retail transactions in 2005, broken down as follows:Transaction type Retail spendin 2005 (£bn)Proportion(%)Debit cards 8937Cash8134Credit Cards6125Cheques94Total240100 As you can see, UK retail spending on plastic cards came to £150bn, which is five-eighths (63%) of the total. So, when buying groceries and the like, we are far more likely to pay with plastic than with notes and coins. What's more, when we widen the net to include total personal spending in all environments, cash spending has finished second to plastic cards for the second year running, as the following table reveals:Transaction type2005 spend (£bn)Proportion (%)Debit cards17117Credit cards12412Cash27327Automated *25125Cheques18619Total1,005100* includes direct debits, phone, online and standing-order payments.Hence, particularly among younger generations who have been weaned on plastic cards and easy credit, cash is quickly going out of fashion. Debit cards have been in use in the UK for almost two decades, whereas the first credit card, Barclaycard, was introduced in 1966. Also, while cheque usage is falling fast (down almost an eighth, 12%, on 2004), plastic-card spending rose by a seventh (14%) between 2004 and 2005.Alas, it's much harder to control your spending when you pay for everything with plastic, rather than seeing real notes and coins leave your hand. Nevertheless, here are four reasons why paying with credit cards is a smart move:Cashback of up to £2 for every £100 that you spend -- check out these great offers;Up to a year's interest-free credit on retail and online spending with a 0% on new purchases card;Transfer existing balances to a 0% balance-transfer card to enjoy a breather of up to a year from paying interest; and Valuable legal protection when you buy goods costing £100 or more -- learn more here.I'll leave you with one final thought: as my second table shows, we spent a total of £1,005bn in 2005, or just over a trillion pounds. However, according to the Bank of England, our total take-home pay last year came to a mere £831bn. As a result, we spent £174bn more than we earned, which largely came from borrowing and dipping into our savings. This sounds like a recipe for ruin to me!More: Check out the Best Buys in our Credit Card, Personal Loan and Savings centres!