How to use credit cards and protect your consumer rights

12 December 2014

Tips to help you protect your consumer rights when you use a credit card.

A guide to using credit cards...

Buying goods with a credit card can help give you a bit of time before you have to pay. But credit cards have another significant advantage in terms of the consumer protection they offer.

Vital legislation for consumers using credit cards

Under a piece of legislation called the Consumer Credit Act, cardholders can make a claim against their lender if there is a problem with the goods or services they use their credit card to buy.

Anything bought using a credit card which costs between £100 and £30,000 is eligible for this protection under Section 75 of the act.

Consumers are still entitled to Section 75 protection even if they used their credit cards to pay only a part of the total cost of the item or service. So if you used your card to put down a £50 deposit on a £500 holiday but paid the balance by cheque, Section 75 would still apply.

This law also covers store cards and store credit agreements.

Find out more about Saga's Platinum Credit Card...

When are credit card users protected?

Section 75 has helped many people claim back the cost of holidays in recent years after tour operators and airlines went bust: in such cases, it can be almost impossible to get the money back from the company, but the Consumer Credit Act obliges the credit-card provider to make good any losses.

If you are in dispute with a retailer over faulty goods, on the other hand, you could seek redress from your credit-card lender by saying you are making a claim under Section 75 of the Consumer Credit Act. The lender may then take up the matter with the retailer in order to get its money back.

If the company you are dealing with is still trading, your lender may tell you to complain to it first: this may be a sensible approach, but you still have the right to claim from your lender at the same time as complaining to the retailer – although you are not entitled to double the compensation if both approaches are successful.

How credit card users can complain

If you are unhappy with your lender’s response, you can take your case to the Financial Ombudsman Service at no cost.

The Ombudsman will look at your claim to see if your lender has followed the law and treated you fairly. If it decides in your favour, it can direct the lender to repay you the money you are owed.

Your consumer rights when shopping with a credit card...

The opinions expressed are those of the author and are not held by Saga unless specifically stated.

The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.