Rather than just handing over the cash in exchange for that new kitchen or new car, it’s arguably better to pay on a credit card at the point of purchase and then use the cash to pay off the credit card balance.
The reason for this is that when you pay with a credit card, you get a level of purchase protection that can prove very valuable.
When you pay on a credit card, your purchases are protected by a consumer law called ‘Section 75 of the 1974 Consumer Credit Act’.
Under this, the credit card company and the merchant are jointly responsible to make sure you’re not left out of pocket if something goes wrong when you buy something costing between £100 and £30,000.
In other words, if you buy something using a credit card that turns up faulty, not as promised or simply doesn’t turn up at all, you should be able to claim back what you paid. The same applies if the retailer you made your purchase from goes bust.
What’s more, you don’t need to have paid the full amount of the purchase to be eligible for protection. Even if you’ve just paid a deposit on a credit card, as long as the item or service is worth more than £100, you’re in business.
How to make a claim
If you buy something on a credit card and something does go wrong, the first thing you should do is speak to the company you bought from.
If you get no joy there, you should take it to your credit card company. (There should be a contact number on your latest bill.)
If, however, the company you bought from has gone into administration or simply disappeared, then you should go directly to your credit card issuer.
There’s a formal process you’ll then have to go through, but as long as there are no complications, your credit card should be refunded in just a few weeks. The card issuer should freeze the transaction during this time to make sure you pay no interest.
You can help to speed up the process by gathering up any receipts, order confirmations, quotes etc.
What about debit cards?
If you pay for your items using a debit card, you will still have a degree of protection under the Visa, Mastercard and American Express chargeback schemes. BUT it won’t be as valuable as that provided by credit cards.
For a start, the scheme isn’t a legal requirement and there’s no guarantee you’ll get your money back.
However, it can be useful if you’ve made a purchase for under £100 as the minimum claim amount is £10. There’s no maximum.
You can make a claim if your items don’t turn up or they arrive damaged, or if the retailer goes bust. But you’ll need to make your claim within 120 days of making your purchase.
To do so you’ll need to contact your debit card provider who will then seek to get the money back from the retailer’s bank.
Remember though, if you’re making a purchase for more than £100, it’s worth using a credit card as it will give you much better protection.
Please note: any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.