A cash versus card conundrum

And that is true whether you are having your washing machine serviced or you are buying things in a shop or online.

Because if you pay by credit card for items worth at least £100 then you are protected by the Consumer Credit Act if those items turn out to be duff. Under section 75 the credit card provider has to refund your money in full if the items do not arrive, are faulty, or the firm you have paid goes bust before the goods are shipped.

Of course, normally you can return items that are faulty or not as you were promised. But that right is of little use if the retailer disappears. For example, if you buy tickets for an event but the deal is a fraud and the tickets never arrive then the card issuer has to refund your money in full. There is an upper limit of £30,000 but that will not affect most of us!

There is now similar protection even for items worth less than £100. Both Visa and MasterCard operate what is called ‘chargeback’. That means they will refund your money if the retailer will not – or cannot. And while s.75 applies only to credit cards, chargeback covers both debit and credit cards.

So paying by plastic is always the safest way. You do not get this protection with a cheque, bank transfer, PayPal, or cash.

If you order things online or by phone then you have the right to send them back and get a full refund within seven days of receiving the goods. You do not have to have a good reason. If you do not like them then you can return them. This right is given to you under European ‘distance selling’ regulations.

If you are receiving money for something – perhaps a car you are selling – then be careful of cheques. You have to wait for a full six working days after paying it in to be sure that the cheque will not bounce. The same rule applies to banker’s drafts as well. Once six working days have passed you can be sure that the bank will not take the money back even if the cheque or draft was duff. But before that it can be reversed.