Paying with a credit card might be something you do only when you don’t have the ready cash, when you’re buying by mail order or over the internet, or when you want to earn cashback on your purchases. But there's another good reason why you might want to use your credit card more.
This involves the special laws for buying on credit that give you valuable extra protection if something you buy is faulty, not what you ordered, or simply doesn’t turn up.
This special law is known as the Consumer Credit Act 1974.
So what is the Consumer Credit Act 1974 and how does it help?
Under section 75 of the Consumer Credit Act, the card company is ‘jointly and severally liable’ for any breach of contract or misrepresentation by the company from which you make a purchase. This means it is equally responsible along with the retailer or trader for the goods or service and you can put a claim to your credit card company in the event of something you buy being faulty, not what your ordered, or failing to turn up.
Importantly, you don’t have to reach a stalemate with the retailer or trader (who normally are your first port of call when making a complaint) before you can contact your credit card company. However, your rights under the CCA are particularly useful if the retailer or trader has gone bust or it doesn’t respond to your letters or phone calls.
There are some limitations to when a card company is liable along with the retailer or trader. The goods or services you have bought must have cost over £100 and not more than £30,000.
However, you don’t have to have paid the full amount on your credit card – the card company is liable even if you made only part of the payment (a deposit, say) on your card. And this part-payment can be as little as £1. It is the value of the goods you are buying that is key, not the amount paid on the card.
For example, if you bought a car from a small local dealer and paid a £500 deposit with your credit card and the balance of £4,000 by cheque, you would be covered for the whole £4,500 under section 75 if the dealer went bust before you received the car.
So bear this in mind the next time you buy a car from Two-bob Tony’s second hand car dealership or book a flight with Dave & Joe’s airways.
So when can’t you claim against your card company?
There are some transactions where the company that dealt with your card payment is not the same as the one that provided the goods or services. In these cases, section 75 of the Consumer Credit Act 1974 may not apply. Transactions which may not ne covered under the CCA include:
- Paypal and similar online payments
- Credit card cheques
- Credit Card cash withdrawals which is then used for a purchase
- Transactions by a an additional (or second) cardholder
So remember, use your credit card for extra protection when making purchases, on or offline, but make sure you clear the balance immediately in order to avoid paying any interest. If you have a cash back reward incentive on your credit card you will also earn money for using your card (money for nothing!).
(The above was taken from an article provided by Which?.The full article can be found here.)
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