Credit Card Purchase Protection
If your yoga retreat goes belly up (not to be confused with downward dog), or your new bathroom is fitted so wonky that you’re left feeling seasick, you might just be able to invoke your credit card’s super powers to straighten things out for you.
Voluntary purchase protection schemes vary from card to card but under UK law, all credit cards come under Section 75 of the Consumer Credit Act. This provides legal protection that means you should never be paying off debt for products or services that didn’t appear or weren’t as advertised.
If you’re on the lookout for a new card and want to know what consumer protection your new plastic may have built in, here are some things to look out for...
Card protection schemes
Card protection schemes generally fall under three categories: enshrined in law, voluntarily signed up to by providers, or offered as a specific feature or for an additional fee.
When you take out a credit card you universally have access to the Section 75 cover provided by the Consumer Credit Act, providing your purchase fulfils certain criteria.
Card protection schemes: a summary
Schemes are either:
- Enshrined in law
- Signed up to by providers
- Specific features for additional fees
However, you might also find you have access to the Chargeback scheme if your provider is signed up to it under Card Scheme Rules. As a bonus, some select cards also offer features such as extended warranties, price protection or purchase protection. Here’s what’s what…
The legalities of credit card purchase protection
There’s a handy bit of UK legislation that makes credit card providers equally liable for goods as part of the purchase contract, providing the transaction falls within certain boundaries. If you buy something that doesn’t arrive, doesn’t look the same when it arrives or is just plain faulty, providing the item cost between £100 and £30,000 you can invoke Section 75.
So, if the company you’ve bought from is unresponsive or unwilling to resolve the issue, you can approach your credit card provider and ask them to refund the money back to your account or, if suitable, cover the cost of a repair.
Exceptions to protection
While it’s important that any single item must be over £100 it doesn’t actually matter if you haven’t paid for the item in full on your card. In fact, you could pay just a few pounds of a thousand pound holiday and still be entitled to the same cover. There are some exceptions to be aware of here:
- Firstly, the protection covers the person who has the contract with the credit card provider i.e. you the card holder. If you have a second card provider and you try to claim for a purchase they have made, you won’t necessarily have a favourable outcome. The waters here are greyer than your dirty dishwater.
- Secondly, if the transaction is conducted through a third party e.g. if you bought a flight from a travel agent or funded a Paypal account purchase with your credit card, the contract is deemed to be interrupted.
So, when it comes to what you use to pay for things and where, a little knowledge goes a long way. Oh, and if something goes wrong with a purchase on a card you’ve since paid off and closed, you’re still covered. Now, isn’t that cosmic?
The voluntary-provider credit card protection
Chargeback is something both debit and credit card providers can sign up to and the good news is, it can be used on goods that cost under £100. If a purchase never materialises or is not up to scratch, your card provider can reverse the transaction to move the money back onto your card.
This isn’t always an easy process though and it can take a bit of time to get your money back. That said, it’s always worth a go if you’re getting nowhere with the retailer or service provider.
The product-specific purchase protection
If you’re a credit card holder, ID fraud protection is included as part of the deal but some providers and products offer additional consumer protection too. Purchase protection and price protection may be included as part of a monthly or annual fee with your credit card or offered as a ‘credit card reward’ to make a product more attractive.
Price protection v purchase protection
Price protection typically covers you if an item you buy lowers in price within X amount of days from purchase. In this event, you can ask for the money to be refunded back to your account. Purchase protection covers stealing and accidental damage, again this can be capped within a particular time period. Some credit cards also extend the warranty of goods purchased on cards, which could be handy if your freezer warms up just as the manufacturer’s warranty has gone cold.
If you’re on the lookout for a credit card and would like to shield yourself while shopping, why not fire up our Money Matcher to find a card for you?
For more information, see our guides to understanding credit cards, which credit card is best for me or find alternatives to credit cards here.