Worried about the £100 contactless spending limit?
In my book Purposeful Wealth, the subject of cashflow features in part 3, Wise Financial Strategies.
Budgeting is the cornerstone of being able to manage your money well and wisely. Budgeting doesn’t need to be complicated, and it doesn’t have anything to do with how much money you have.
A budget is simply a plan and it’s only once you do this that you will be able to control your money and identify ways of being more efficient with your spending.
So, here are some tips for anyone worried about the change ahead of the increase in the contactless spending limit today.
The contactless card spending limit rises from £45 to £100 on Friday 15th October 2021.
Once implemented, this change will allow us shoppers to make in-store purchases for as much as £100 each time, using their contactless credit or debit card.
We will not require a PIN to confirm these transactions.
The contactless spending limit rise follows a public consultation and discussions between the Treasury and Financial Conduct Authority.
It’s the latest in a series of spending limit increases, after it last rose from £30 to £45 in April 2020, in the early stages of the Covid-19 pandemic.
Sarah Pennells, Consumer Finance Specialist at Royal London, said:
“The increase in the contactless spending limit will make it quicker and easier to pay for bigger purchases at the tills. But this may not be a good thing for everyone.
“The higher limit could encourage people to become ‘tap-happy’ and spend more than they can afford, and it can be harder to keep track of what you’re spending if you don’t get a receipt every time. If you are worried about this, turn on notifications if you use a banking app, so you’ll be alerted every time you use your card. If you don’t bank online, make sure your monthly essentials are covered and check out limits for your spending.
“Although fraud on contactless cards is relatively low level, it can be distressing to those who experience it. You should treat your contactless card the same way as you’d treat cash in your pocket, so be careful when you use it and don’t give it to anyone else.”
Sarah shared five tips for anyone concerned about this increase in the contactless spending limit.
- Track your spending
Being able to tap and pay for purchases up to £100 may make it easier for money to slip through your fingers. In many banking apps, you can turn on notifications, so you’ll be alerted when you make a payment. It’s a good way of checking that you haven’t accidentally paid too much and keeping track of what you spend. You can also use budgeting apps that help you see what you are spending on different categories each month, such as eating out/takeaways, travel, and household bills.
- Set limits on your card
Not all banks insist that customers have a £100 contactless card limit. Lloyds, Halifax, Bank of Scotland, and Starling will let customers set their own contactless limits on their card. Some other banks have said they are considering introducing this.
- Keep an eye out for any transactions you don’t recognise
It’s important to check your transactions online or through your app regularly. If you notice any transactions you don’t recognise, contact your bank immediately. According to UK Finance, contactless fraud on payment cards and devices represents just 2.9% of overall card fraud losses, and you are fully protected against fraud, so you should get all of your money back.
- Ask for a Chip and PIN
If you would prefer not to have the contactless facility on your card, most banks will replace it with a contactless free card or turn off the facility on your card. This can usually be done in branch or over the phone if not using your mobile app. You can also pay with your phone if you prefer to have an additional layer of security such as face ID or fingerprint recognition.
- Don’t give your card to someone else
As part of the new £100 limit, banks won’t ask for your PIN until you’ve spent £300. So anyone who uses your card could spend up to £300 before a PIN is needed. It can be easy to let someone borrow your card or hand it over to a friend to pay for a round of drinks Keep your eyes on your card and if you misplace it, you can usually freeze it in your app until you find it or report it as lost or stolen.
One last thing, remember the words of Professor Eugene Fama who once stated, ‘Money is like soap, the more you handle it, the less you have’.