Buying goods and services with a credit card gives you legal protection. Don't make the mistake I did!
I seem to have been hoisted by my own petard in my efforts to be a clever dick when it comes to spending money. Serves me right!
About three years ago, when my husband and I were having our kitchen refurbished, we went toddling off to Scottish Power to buy a new cooker. Although I generally think extended warranties are a waste of money I was persuaded to buy a five-year warranty in this instance because, at the time, it seemed a no-brainer.
For a start, if I took out the warranty I'd get a £145 discount on the cooker. And, even better, I could claim back the insurance premium in full (£229) at the end of the five years as long as I applied for it within a strict 30-day 'window of opportunity'.
Unfortunately, a few months later, Scottish Power sold their electrical retail outlets to Powerhouse who subsequently went into administration. Although they were bought out and continue operating, the new owners did not take on liability for the warranties and, in fact, the company that operated the warranties, PowerPlan, then went into administration itself. My cashback warranty is worthless.
None of this could have been foreseen, of course, but the biggest mistake I made at the time was not buying the cooker with a credit card. Instead I used 'real money' from our current account by paying with a debit card.
The reason is because when you use a credit card to buy something, your contract is not just with the retailer but also with the card provider. Under the terms of Section 75 of the Consumer Credit Act, both have equal liability if anything goes wrong so you can take action against either of them to get compensation. (A debit card doesn't give you the same protection).
The legislation restricts the card provider's liability to purchases costing more than £100 and less than £30,000 but if the retailer goes bust or the goods or services aren't delivered, then you should be able to get compensation from the credit card issuer.
My only recourse when my 'window of opportunity' arises in two years' time is to contact the administrator of the scheme, The Macdonald Partnership, which is contemplating legal action to try and recover sufficient funds to meet any cashback claims. I've already registered with them that I will have a claim in the future but for the moment, all claims (and there could be as many as a quarter of a million of them) have been suspended.
Remind me to use a credit card next time I make a large purchase!
Get a great deal on your Credit Card.
