There are so many benefits to using a credit card, one of which is credit card protection. However many of us don’t fully understand or use these safeguards that actually free.
Under Section 75 of the Consumer Credit Act, you are protected by your credit card provider for purchases. But what does this mean, and are you really safer paying with a credit card than with cash or a debit card?
Here’s credit card protection explained:
Section 75 of the Consumer Credit Act
In a nutshell, this law means that if you purchase anything such as a laptop or a holiday between £100 – £30,000, your credit card company is as liable as the company from where you’ve bought your product if it is faulty.
These are the situations where you’re covered:
- If the product is faulty or not up to standard
- If the company has misrepresented what it is supplying
- If you do not receive your purchase after ordering it
Fortunately you do qualify for reimbursement even if you make a part payment for a purchase with your credit card. So if you paid a £30 on your deposit credit card and another £300 on a debit card you would be able to claim for the full £330.
Chargeback also allows you to try to recover purchases under the £100 limit and is available on debit cards and credit cards like Visa, Amex, Maestro, and Mastercard. However this is what’s known as a ‘Scheme Rule’, so it is not legally binding unlike Section 75. For this reason, you are better to claim on Section 75 if you have spent over £100.
When do you not qualify for Section 75?
There are certain requirements to qualify for this act, for example the individual item you have bought must be over £100, rather than the total bill. For example, if you purchased a return plane for £120 you would be eligible, but if you paid £60 each for one-way tickets then you would not qualify.
As always, making payments with credit cards can be very beneficial for your finances such as protecting your money and managing your outgoings to spread the cost of expensive purchases. But it is important to use credit cards responsibly and create a sustainable budget that you can stick to so that you can avoid potential financial difficulties in the future.