More than 22 million adults in the UK spent £16 billion online last year but why is the credit card the favoured method of paying?
Picture it. You're standing in the queue at Woolies on the verge of handing over £30 following your latest raid on the CD and DVD shelves. Do you typically hand over cash, whip out your debit card or use a credit card to pay?
According to the UK payments association, APACS, you are more likely than not to use your debit card. Last year, spending on plastic cards, at £273 billion, outstripped cash spending (£272 billion) for the first time ever and debit cards made up 65% of all plastic card purchases.
Buy your goods online, however, and you're more likely to use your credit card. Last year credit cards accounted for 72% of all online transactions. Now, why is that?
APACS say it's because people feel safer using credit cards online. It's much easier to check a credit card statement for online spending than it is to check a current account statement which will invariably list the motley collection of direct debits and standing orders many people have. And it seems people are becoming more aware of the protection against lost, stolen or damaged goods that credit cards offer.
Section 75 of the Consumer Credit Act ensures that when you buy something using a credit card, your contract is with both the trader and the card issuer. The card provider has equal liability for anything that goes wrong so if you have trouble sorting out a problem with the trader you can take action against the card issuer to get a refund. The legislation is restricted to goods sold for more than £100 and less than £30,000, but it's tremendously useful in situations where, for example, the trader goes bust.
Interestingly, the legislation applies even if you only make a part-purchase - for example, by using your credit card to pay a deposit of, say, £20 for goods priced at £120.
The question of whether you're similarly protected when buying goods from traders outside the UK is not yet certain. The Office of Fair Trading takes the view that card issuers are just as liable for goods bought from overseas and it is currently appealing against a court judgement which ruled against that view. Note, however, that you do have certain rights for good bought withine the EU under alternative regulations regarding the sale of goods.
Nevertheless, Section 75 covers everyone using a credit card but you won't be surprised to know that card issuers don't exactly fall over themselves to let you know about this extra protection. In fact, you might even have to fight quite hard to enforce your rights with some companies. Stick to your guns if you know you're in the right.
At any rate, take note of the following tips:
- Always keep copies of your credit card statements in case you need proof of the amount you paid.
- If you need to make a claim, go back to the supplier first.
- If you get no joy from the trader, contact the card issuer in writing and don't be deterred if you initially get a negative response.
Be aware that debit and charge cards are not covered by the legislation so, when you buy something for more than £100, make sure you use your credit card to do it. The extra protection makes it worth it.
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