Plastic fivers and the changing ways we pay

Existing notes can be used until next May

Plastic fivers and the changing ways we pay

It might take a few weeks until you see one, but the first plastic five pound note i now in circulation. The big difference is the note is no longer made out of paper. Instead it's a thin polymer note, meaning the phrase "paying with plastic" no longer relates to just cards.

The idea behind the change is to reduce forgeries, and make them stronger so they last a little longer when in circulation. They're also a little smaller, apparently waterproof and have an image of Winston Churchill on the back.

The new notes are available from a few hundred cash machines and from the Bank of England in London, which means you probably won't get one your hands on one for a while – but you can keep using the existing notes until next May when they will be withdrawn.

Later in the summer of 2017 a new £10 will be released, followed by a new £20 note by 2020. There's also a 12-sided £1 coin to be released in March next year.

Changing ways we pay

These new notes are the latest example of technology changing how we use and interact with money.

It's only been a few years since contactless card payments – where you tap your debit or credit card on a terminal to pay – have started to gain traction. Now it's one of our favourite ways to pay. In June almost one in five transactions (18%) were made this way according to the UK Cards Association, up from 7% in June last year.

This jump was partly helped by the increase in the contactless maximum from £20 to £30 a year ago, even though the average contactless transaction is just £8.60.

Gadgets have also joined the cashless party, with phones, stickers and wristbands letting us go cardless too, while you can now transfer money to a friend simply by entering their mobile phone number.

Is cash best for you?

As quick, convenient and easy to use as contactless is, it might not always be good for your bank balance.

There are theories that if you have to hand over physical cash, you'll think twice about buying something – a useful barrier to impulse spending.

Plus tapping your card can mean you quickly lose track of what you are spending, particularly on a night out. If you are budgeting, taking the cash with you that you can afford to spend can keep you in the black and not on the breadline.

This article is provided by the Money Advice Service.


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