Credit Cards and Consumer Protection

Credit cards these days are packed full of features such as cash back, rewards, balance transfers and interest free purchases, and are now much more than just a handy payment method or an easy way to borrow money.

All of these benefits are widely publicised in advertisements and marketing blurbs, and there's no doubt that if used wisely they can be of great advantage to the cardholder. There is however another significant benefit to using credit cards for purchases, one which is less talked about by card companies, and that's consumer protection.

Consumer Credit Act

Under section 75 of the Consumer Credit Act, when you buy something for between Ł100 and Ł30,000 using a credit card, the card issuer is as equally liable as the seller if there's a problem. If the trader goes out of business, and doesn't fulfill your order, then the credit card company must swallow the debt and refund your card. Similarly, if goods ordered by mail order arrive damaged or don't turn up at all, you can claim a refund direct from the card company if the trader proves to be unresponsive to your claims.

This much protection is guaranteed by law, and recent test cases have also meant that you're protected in the same way when you use your card abroad - which also means buying goods from web sites based in another country.

It's important to note that these legal guarantees don't apply to charge cards, debit cards, or prepaid cards, and so if you intend to make a large purchase online or by mail order, it's a good idea to do so using your credit card so as to take advantage of this protection against losing out if something goes wrong. Be sure though to credit your account with enough money to cover the purchase so as not to be hit by interest charges.

Credit Cards and Consumer Protection

Consumer Credit Act

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