Protect your pennies
SECTION 75 OF THE CONSUMER CREDIT ACT 1974
CREDIT cards are an easy, convenient way to manage your money but they also offer an extra layer of protection that you don’t get when buying goods and services with cash, cheque or a debit card.
Your transactions are covered by a useful piece of legislation known as Section 75 of the Consumer Credit Act, yet more than half of us do not know this exists, according to research from credit app Totallymoney.
Section 75 allows you to raise a claim for compensation against your credit card issuer, if the goods are not up to scratch or never arrive.
While the first port of call should be the company that sold you the items, Section 75 cover gives you a second shot at redress.
Holidaymakers nervous about booking overseas trips as airlines cancel flights should consider putting the cost on their credit card, which protects against travel companies going bust and cancellation.
Section 75 protection applies to purchases of between £100 and £30,000. Even if you only paid part of the cost on your card, say, by putting down a deposit, it lets you claim the full amount lost.
Credit card companies are regulated
by the Financial Conduct Authority
(FCA) and they are equally liable by law if the supplier doesn’t stick to their side of the agreement.
Purchases made with a debit card or charge card aren’t covered, although your card provider or bank may still help through a chargeback process.you have no protection if you make payment via an overdraft or bank loan, or one of the new breed of “buy now, pay later” schemes.
Totallymoney chief executive Alastair Douglas is calling for holidaymakers to take advantage of Section 75, with Brits expected to spend a massive £41billion on foreign travel in 2022.
Huge sums are at stake and no company is too big to fail.thomas Cook, Flybe and WOW Air are just some of those to collapse in recent years.
Douglas said: “With a summer of holiday cancellation hell forecast, those making payments with a credit card can be confident that if anything does go wrong, they can make a claim.”
Unlike insurance, Section 75 protection is free and there is no excess to pay on claims.
“Customers will be covered when there’s a breach of contract.this includes flights being cancelled and holiday firms going bust.”
Worryingly, many aren’t aware that this free payment protection exists, he added.
If you booked your holiday through a member of travel industry schemes ABTA or ATOL, you should contact them first, with your credit card a backstop.
You still need travel insurance, as this will cover other problems, such as lost baggage or falling ill overseas.
Section 75 does have some grey areas. It usually only applies to payments directly to the firm providing you with services. So if a travel agent takes payment on behalf of a supplier, you may not be covered, although you may be if they put together the holiday package themselves.
Purchases made on a credit card through Paypal aren’t covered.
Section 75 covers most purchases, not just holidays, Douglas said. “This includes buying a new TV that turns out to be faulty, to a firm failing to deliver on a purchase when it goes out of business.”
He said the recent collapse of online fashion retailer Missguided, which will not refund customers who have returned clothes, is a great example of how Section 75 can help.
There is never an absolute guarantee you will get your money back, but rules drawn up 48 years ago shift the odds in your favour.