Consumer Rights
Here’s why credit cards are preferable to debit cards: If you use a credit card, you have certain rights that you do not have if you pay by cash, check, or debit card. This does not mean you should charge everything on a high-interest credit card; however, it can be good to use your credit card judiciously with proper planning.
If you do not have any outstanding debts and just want a card that you plan to pay off in full without ever having to make an interest payment, a credit card is a smart choice. This way you get all the benefits the card offers, as well as the protections guaranteed under the Consumer Credit Act, outlined in Section 75. If you use a credit card, you are entering into a borrowing arrangement, regardless of the fact that you may pay your credit cards off completely every month. When you enter this arrangement, you get certain rights. Remember that you do not get these rights if you use a debit card.
According to the Core Rule, in the event you pay for items that are valued at more than £100 using a credit card (even for partial payment) then the credit card company is as liable as the retailer. Therefore, if you have any complaints regarding goods not being delivered or any of the other statutory rights we have described, you can simply take your complaints to the credit card company rather than having to deal with a retailer. If the retailer goes out of business or is very obstructive, this will be quite helpful.
There was a case recently in which it was proposed that this sort of protection didn’t apply to items bought abroad; however, the Court of Appeal disagreed with this proposal and sided instead with the consumer. In this way, you will have protection when you make purchases abroad. Therefore, if you buy something while you are abroad you will be able to make a direct claim with your credit card company if something goes wrong. You won’t have to try to deal with a foreign company directly.
How do Debit Cards Compare?
You will not have statutory protection; however, MasterCard and Visa let member banks take advantage of a dispute procedure known as “chargeback”. What this does is, it allows your bank request a return of your payment from the bank of the company you did business with. In this way, you may be able to get your money back.
To take advantage of “chargeback” you should file a complaint with your debit card company no more that 120 days after you expect your goods to have been delivered. Then they can dispute the transaction. Then the issuer of your card can get the money back from the bank the merchant uses. Understand that many members of your bank staff may be unaware of this process. You may have to tell them about it. Remember that this process is only available with MasterCard and Visa Debit cards.
So then, the acquiring bank is responsible. This means that the bank is liable, not the company. You will be able to get money back in this manner if your transaction hasn’t been properly completed.
The difference between Section 75 protection and chargeback is that the Section 75 Credit Act Protection is a mandatory and legally binding rule. Nonetheless, when you do decide to invoke the chargeback rule, you have a good chance of full reimbursement. When items aren’t delivered, it may mean that the company has gone out of business.
The main difference is that in a situation in which you complain in regards to a credit card purchase under section 75, it is the credit card company that is legally liable. When considering taking advantage of the chargeback procedure, you are only considering the Visa/Mastercard process. This is not as complex, and you won’t go to court, but at the same time, you don’t have the protections of the legally binding Consumer Credit Act.
