Thursday 19 September 2019

The green wave of plastic use

Spending is up on debit and credit cards - but always take fees into account

Spending sprees: There are six million active cards in this country
Spending sprees: There are six million active cards in this country
Sinead Ryan

Sinead Ryan

When it comes to spending our money, plastic has never been more popular as our flexible friend.

Over €17bn in credit and debit card transactions occurred in the first three months of 2019, up 9pc over the same time last year.

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Debit cards are by far the most popular with their usage 5.3 times higher than credit cards.

But with six million 'active' cards in the country, Irish people have shown that they love tapping, swiping and chip 'n' PINning. We are truly becoming a cashless society.

But how and when we use our cards can really have an impact on our finances.

Banks are increasing the cost of maintaining current accounts and hiking transaction fees, while credit card interest rates remain astonishingly high, topping 20pc a year.

So how can consumers know when it's best to use debit, credit, or no card at all? That's what we're looking at this week, and the panel below gives some tips about strategic card use.


The average spend on debit cards at point-of-sale is €40.62, according to the Central Bank. For credit cards, it's €80.12, both up from last year.

Around 18pc of all debit card spending is in retail outlets, mainly supermarkets. It's by far our biggest card bill and that's not surprising. It costs an average of €150 a week to feed a family of four.

For credit cards, the bulk is spent on transport and accommodation - reflecting the up-tick in foreign travel after the recession.


Although credit cards are incredibly expensive if you don't pay off your bill on time, in full, each month, they're actually much cheaper to use than debit cards if you do.

Apart from Government stamp duty (€30 per year) they are free as long as you're a disciplined shopper.

With debit cards, even though you're just spending your own money, banks slap on charges depending on what you use it for. Each transaction can be charged for separately, along with account maintenance fees.

It's a fixed fee too, so buying something for €5 or €500 costs the same, which makes smaller purchases relatively more expensive. Bank of Ireland charges 10c per purchase, 25c to withdraw cash and even 1c for contactless payments, aside from monthly account maintenance fees.

AIB charges 20c for debit card purchases and 35c for ATM withdrawals.

Ulster Bank, having offered transaction-free banking to loyal customers for years, has now introduced hefty charges for purchases (20c) and withdrawals (35c). And Permanent TSB, having enticed 'legacy' customers to move to its flagship 'Explore' current account, promising low account maintenance fees, have just rewarded them by hiking charges by 50pc, to €6 per month.

KBC is alone in bucking the trend with free banking on its 'Extra' current account, but only if you lodge €2,500 to it every month.

Point of sale versus online

You'd think that we were doing practically everything online these days, and retailers are bemoaning the internet as they struggle to keep main street stores open.

But research from AIB of its own customers' spending across debit and credit cards found that in fact 86pc of retail purchases were made in-store last year.

Just 14pc were online. That's ignoring quite a lot of spending (eg, flights, accommodation, etc, where cards are essential), but it's an interesting snapshot.

It also found 44pc of purchases were of the supermarket variety, with 17pc on clothes and shoes; this echoes Central Bank figures.

Irish Independent

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