What protections do credit cards offer (besides Section 75)?
By Benjamin Salisbury
Credit cards offer various protections for consumers when used to pay for goods and services.
The main protection comes from Section 75, enshrined in the Consumer Credit Act 1974. Consumers are protected for purchases between £100 and £30,000 and can get money back from the credit card issuer if they can't get a refund from the retailer if the item is faulty, misrepresented or the company goes bust.
The Consumer Credit Act 1974 also includes protections against fraud, detailed in this guide from the UK Cards Association.
Alternatively, there's protection in chargebacks. Your bank or card issuer can reverse a transaction and initiate the return of funds to your account if there is a dispute.
Most online, phone or mail order purchases in the European Union give the purchaser a 14-day cooling-off period, starting from the day you receive the goods, during which you can cancel the order and get your money back.
These are the obvious protections and are very useful, but they aren't the only safety nets in place. Here are some lesser-known defences that your credit card may provide:
This comes free with some credit cards, but not all. It protects you against identity theft when you pay for items with your credit card.
You often get two free credit checks a year with this protection. Checking your credit can alert you if anyone other than yourself has tried to apply for credit using your personal details. ID theft protection also gives you access to an ID fraud helpline number.
"Mastercard ID Protection prevents, protects and restores a cardholder's identity," Adam Keal, director of communications at Mastercard, said in an emailed response to questions.
"Cardholders want peace of mind that their personal data is secure when they're shopping or adding personal information online," Keal said. "Our solution monitors accounts before theft can take place as well as offering protection and restoration."
Many credit cards come with extended warranty protection, which usually doubles the manufacturer's or retailer's warranty on a product for up to one year.
For example, HSBC's Premier credit card gives up to two years' extended warranty on many household appliances. You can register up to three appliances each year.
This covers most items purchased with an eligible credit card if they are damaged or stolen within 90 days of purchase. Cardholders are usually reimbursed for the repair, replacement or accidental damage to the item.
Some American Express credit cards give up to £2,500 of purchase protection cover for eligible items up to 90 days after purchased. Watch out for exclusions, though, as theft of electronic items and equipment is not always covered.
Cardholders can get a refund of an item's purchase price if a UK retailer refuses one. However, the limits are relatively low, typically around £200.
If you use a credit card with price protection and find a lower price for a new item within 60 days of purchase, you can get the difference refunded to your card.
If you did not explicitly authorise the transaction, any unauthorised purchases are not your responsibility and your card issuer will refund any charges.
There are many different types of travel protection, and what is available depends on the specific card. Some issuers, including Mastercard, offer specialist travel credit cards that combine extra protections, concierge services and rewards programmes.
Here are some of the most common forms of travel protection:-
- Baggage delay insurance - If your baggage doesn't arrive and you must replace items to use for your trip, you can get a refund if you bought flight tickets with an eligible credit card.
- Car rental collision damage waiver insurance - If you have an accident or your hire car is stolen, this cover pays for the costs if you paid for the entire rental with a qualifying credit card.
- Lost or damaged luggage insurance - If your luggage is lost or damaged, and the whole flight was paid for with an eligible credit card, you can be reimbursed for the cost of replacing the items.
- Travel accident insurance - Some credit cards offer death or dismemberment coverage for tickets paid for with an eligible credit card. Others offer travel health insurance.
- Trip cancellation insurance - You get back any non-refundable cancellation fees if your trip is interrupted or cancelled by circumstances out of your control.
The protections don't stop there. There are other protections you can get from using your card.
For instance, if you are charged for an item you didn't pay for, or if the wrong amount has been charged, call your credit card issuer and it will try to resolve the problem. It could be for a transaction you cancelled, a duplicate payment, goods you never received or an unexpected charge from the card issuer itself.
If the card issuer can't cancel the charge immediately, it will usually investigate and suspend the charge until the issue is resolved. You won't pay interest on the charge during the dispute period. Depending on the decision, the transaction will be permanently suspended or put back on your statement.
Exclusions and limitations apply with all protections. Many are available on fee-free cards but some are for premium cards with an annual fee. Full details of protections are found in the documents you receive with your credit card.
to take advantage of protections
Your first point of contact will usually be your credit card issuer. It will try to resolve any dispute directly.
If you are not happy with the result, however, you can contact the Financial Ombudsman.
"Consumers should contact us if they have any concerns about their credit card or another financial product," James Schofield, policy and communications adviser for the Financial Ombudsman Service (FOS), said in an emailed response to questions.
"They need to make a formal complaint to the business first, and if they're not happy with the business' final response, they can come to us."
"Additionally, the Financial Services Compensation Scheme (FSCS) may be able to compensate customers if the firm falls into administration/liquidation," Nick Offord, a spokesperson for the Financial Conduct Authority (FCA), said in an emailed response to questions.See related: Section 75 and third parties: when you aren't protected, Credit card travel insurance could protect you from holiday nightmares
Published: 10 November 2017
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