Posted by Peter Brady on Mon 28th August 2006 at 07:00 AM, Filed in Credit Tips
Credit cards have long offered you a little more protection than your average debit card - but why is this?
Quite simply Section 75 of the Consumer Credit Act is the statutory instrument that specifically gives you added protection when paying with a credit card. Under the law you can make purchases between £100 and £30,000 on a credit card and claim from the credit company if something goes awry. Pre paid deposits on your credit card can even entitle you to a refund of the entire cost of the goods from the credit card company. This offers unrivalled protection against goods failing to arrive, damaged goods and non functioning goods.
In essence, the Credit Card company is compelled to act as a protective buffer, should the supplier not fulfil their side of the bargain. This provides important protection/extra comfort when buying significant purchases like holidays or cars.
Many credit card companies offer various types and levels of free insurance on purchases. These can include:
- Price protection - if you buy something that is later reduced in a sale or you find it cheaper elsewhere, you can claim back the difference, within a specified time period.
- Purchase protection - if you buy something on your card that is lost, damaged or stolen at a later date, you can reclaim some or all of the cost from the card company. This can be useful extra cover for fragile or high-value goods.
- Travel accident insurance - this pays out lump-sum benefits if you are killed or seriously injured while travelling in transport paid for on your card. As there is no medical or baggage cover, don’t confuse this with full travel insurance.
- Online fraud guarantees and Internet delivery protection - stops you from being liable for any fraudulent spending on your account while ‘distance shopping’ via mail, telephone or the Web.
It can vary, but some credit card companies charge an additional fee for insurance cover. Bear in mind that any additional fee devalues the worth of the insurance.
As always, thoroughly check the insurance policy small print for any loopholes or restrictions.
Many credit card offers incorporate complex loyalty reward schemes. However, fathoming how that really translates into value overall can be literally impossible.
Nonetheless, points, cashback, VIP perks and Air Miles are increasingly offered in an effort to attract customers. It’s not surprising that this is happening when you consider all the research pointing towards customers prioritising loyalty rewards as one of the principal factors influencing their choice of card.
Many cards are starting to link up with store cards such as Nectar, Tesco Clubcard and Boots Advantage Card which can really help rack up some worthwhile rewards. Incidentally, Boots Advantage has long been demonstrated to offer the best loyalty rewards, so combining that with a credit card could be a shrewd move.
Common sense tip with all this is that you ensure the monthly credit card bill is reimbursed in full. If you don’t you can forget making any serious gain in either cashback or loyalty rewards.
Posted by Peter Brady on Wed 23rd August 2006 at 07:00 AM, Filed in Credit Tips
If you’re going to use your credit card in a foreign country then you may be in for a rather unpleasant surprise on your return. Many cards include a “currency conversion fee” of up to 3% of the value of each transaction. Therefore when you pay up your £100 for that special meal in Spain you’re really going to be paying £103.
There are cards out there which don’t charge a fee of which Nationwide has been my favourite for many a year now. Lombard Direct also do a currency free conversion offer but these cards are in the minority.
As always thoroughly check the small print to see if your lifestyle and requirements match the card offer.
Posted by Peter Brady on Wed 23rd August 2006 at 07:00 AM, Filed in Credit Tips
As a rule, withdrawing cash on credit cards can be a very expensive business.
First off, you’re going to be paying very high rates of interest from the instant that you withdraw your cash. On top of that you will be paying interest on accumulated interest if you don’t clear the balance.
Secondly, as a rule, credit card operators charge extortionate fees for withdrawing from a cash machine or over the counter. Fees can vary but they are normally in the region of 2% per withdrawal. Therefore, it’s a bit of a no brainer to avoid cash withdrawals at all costs.
