Guide to credit card protection

Credit card protection explained

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Credit card protection provides you with a level of protection relating to anything you buy costing between £100 and £30,000. If a company that’s sold you something goes bust before the item is delivered, or if it’s broken and the supplier won’t sort things out, you can still get a refund from your credit card provider.

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This applies even if you pay a portion of the total cost of an item on your credit card. For example, if you put a £100 deposit down on your card for a £25,000 car and pay the rest via a loan, you can still claim the full amount on your card if you have a problem with your purchase.

How much does credit card protection cost?

The best thing about this protection is that it’s absolutely free and comes automatically with every credit card, so there are no additional charges and you don’t have to pay steeper rates of interest to get it.

Why do credit cards offer this protection?

It’s all down to something called the Consumer Credit Act. Under Section 75 of this Act, credit cards must provide protection for a purchase above £100 and below £30,000.

Importantly, debit cards do not 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.

It’s all down to something called the Consumer Credit Act. 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, particular ‘premium’ cards or those which levy an annual fee, provide purchase protection, which means when you buy something and it is stolen or lost within a set period of time, typically around 90 days, the credit card company will give you your money back.

For example, if you’ve just used your card to buy a laptop but it is subsequently stolen, your card provider should reimburse you.

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

Extra protection

As well as the protection outlined above, a few – but by no means all –  credit cards also come with free identity theft cover, which will protect you against someone stealing your identity and running-up credit card debts in your name.

This kind of cover typically provides a couple of free credit checks a year, so you can keep tabs on whether there have been any suspicious credit applications made using your personal details, as well as access to an ID fraud helpline.

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 Smart

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