Guide to credit card protection

Credit card protection explained

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How can credit card protection help you to recover money? Read on to find out more.

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When you make purchases on your credit card that cost between £100 and £30,000, you benefit from an extra level of protection if the item is faulty and the company won’t fix it, or in case the business goes bust before delivering your goods.

This credit card protection for purchases helps you get a full refund from your credit provider. 

Even if you only pay a small proportion of the price by credit card, for example paying a deposit, you are still covered – as long as the sum is between £100 and £30,000.

How much does credit card protection cost?

The best thing about credit card payment protection is that it’s completely free and comes automatically with every credit card – meaning there are no additional charges and you won’t have to pay steeper rates of interest to get it.

However, you are only eligible for credit card protection if you make a single purchase that costs between £100 and £30,000. For example, you buy two train tickets - one outbound ticket for £90 and one inbound ticket for £20 – on your credit card, costing £110. You wouldn’t qualify for this kind of payment protection because it’s technically two separate transactions. However, if you bought one return ticket costing £110 you would be covered, since this is a single transaction and it’s over the minimum amount.

Why do credit cards offer this protection?

In 1974, the government reformed the law concerning consumer credit. Under section 75 of the new Consumer Credit Act, credit cards must provide protection for purchases above £100 and below £30,000. 

Notably, debit cards don’t offer this protection, which is one reason why it can be a good idea to pay for things with your credit card instead. Remember, however, that you must be able to pay back what you owe as soon as possible, otherwise interest charges could soon mount up.

Under Section 75 of this Act, credit cards must provide protection for a purchase above £100 and below £30,000.

Purchase protection

Some credit cards, in particular ‘premium’ cards or those that charge an annual fee, also provide purchase protection. This means that when you buy something and it is lost or stolen within a set period of time, typically around 90 days, the credit card company will give you your money back.

For instance, if you used your credit card to buy a laptop but it is subsequently stolen, your card provider should reimburse you in full.

However, this protection usually only kicks in if there is no other insurance is in place. If your laptop is stolen from your home, and you claim on your contents policy, you cannot claim via your credit card too.

Extra protection

In addition to the protection outlined in the above sections, a few credit cards (but by no means all of them) come with free identity theft cover. This protects you against someone stealing your identity and subsequently creating credit card debt in your name.  

Free identity theft cover often provides a couple of free credit checks each year – so you can check if there have been any suspicious applications in your name made using your personal details – and access to an ID fraud helpline.

When are you not covered by credit card protection?

Technically, there must be a direct connection between you (the debtor), your credit card supplier e.g. American Express or Barclays (the creditor) and the retailer supplying your goods or services (the supplier).

If you use a third-party to take payment, then you won’t necessarily be covered. If you use PayPal, for example, then you would not be covered by your credit card (unless the payment goes directly to the seller). However, PayPal has its own protection in place and you may be able to claim, but it is not as extensive as credit card protection.

The same goes for travel agents or group-buying sites, if the connection is broken by the involvement of any third party or an intermediary, then Section 75 won’t apply and you won’t be able to claim. 

What is Chargeback?

Chargeback allows you to reclaim money from your bank if a purchase isn’t delivered, a company you bought from goes bust or a service hasn’t been provided. It provides protection on debit cards, prepaid cards and credit cards, such as Visa, Amex and Mastercard, but is not legally binding.

With Chargeback, you have 120 days to make a claim and protection is provided for purchases under £100 (minimum £10 on MasterCard).

Where to next?

What is a credit card?

6 benefits to getting a credit card

Compare credit cards with MoneySuperMarket’s Smart Search

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