If you have a purchase to make, there are many reasons to use a credit card, even if you have enough money to pay for a purchase upfront.
After all, with a credit card, you can enjoy the privilege of being able to borrow money for up to 59 days without paying any interest. Also, when you make a purchase with a credit card, you automatically get certain legal rights that debit cards don’t offer.
Under Section 75 of the Consumer Credit Act 1974, you have certain legal rights if you use your credit card to purchase a product priced at £100 to £30,000. Even a partial purchase on the card counts. So, for example, you can put down a deposit of £1 on your credit card and pay £99 in cash, and you’d still be covered.
If something would go wrong, such as the company you have transacted with goes bankrupt or your shopping gets lost, the trader and your card issuer share the liability. That means you can ask either for reimbursement.
Say you use your credit card to buy a sofa. Between the date of purchase and the date of delivery the sofa company goes bust. Your sofa is never delivered. Instead of pursuing the sofa company for reimbursement, you can choose to pursue your credit card provider instead – and odds are, your credit card company will cough up a lot quicker than the now bankrupt sofa company!
So why haven’t you heard of this fantastic piece of legislation? As you may understand, this is of benefit to you as a purchaser, not necessarily the card issuer – a reason why credit card companies like to keep it quiet. Card issuers may not always co-operate as willingly as some might hope but that is not a reason for backing down if you have a case.
As mentioned earlier, the legislation still applies even if you use your credit card to pay a part of a purchase or a deposit. It also applies to online shopping and buying abroad. Basically, if it costs £100 or more, you will have more rights if you pay for it with a credit card instead with cash or a debit card.
When shopping around for cards, check for purchase protection information. Purchase protection means that if something happens to items bought (such as stolen, damaged or lost) within a certain time period, you can make a claim. This is especially handy if you are planning on buying delicate products.
But as always check card terms and conditions. And remember, you have certain statutory rights around faulty or damaged goods which cannot be taken away from you by any retailer. Visit the Consumer Direct website for more information.
There is a lot of competition on the mortgage market so some card providers offer additional benefits to those highlighted above. Anything from extended guarantees to travel insurance are worth investigating. Some companies give you price protection which is handy if you spot a product you have just bought now available at a sale price. Price protection means that you can claim the price difference, usually 60 days after the date of purchase. Claims vary in price but often lie in the £10 to £1,000 bracket.
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