Protection when making purchases on your credit card
Published 22 September 2015
You don’t have to spend much on your credit card to be covered under Section 75.
There are so many options now when it comes to making purchases other than cash – as well as debit and credit cards there are payment services such as PayPal, which more and more retailers now offer. But which payment method to use where? Well, thanks to Section 75 of the Consumer Credit Act, using your credit card to make purchases is still a safer option – and here’s why.
What is Section 75?
Before we go through the benefits of Section 75, let’s first make sure you know exactly what it is. Section 75 of the Consumer Credit Act is a UK law that means you’re covered on any purchases that you make using your credit card, between the value of £100 and £30,000. Under the law, your credit provider and the retailer you purchased the goods from, are equally responsible if anything goes wrong with the purchase.
To put it simply, Section 75 is a legal protection put in place to make sure you’re never paying off something that didn’t arrive or wasn’t as it should have been when it did.
But there’s more – you don’t actually have to pay the full amount for the goods on your credit card, just part of it. As long as the item or service you’re purchasing comes to over £100, you’ll be covered on it no matter how much you put on your credit card – this could be as much as £100, or as little as a 1p.
It’s important to note that Section 75 only applies to the use of credit cards, not debit cards, cash, cheques or prepaid cards. But it does apply when using a store card, store instalment credit and some car finance agreements (excluding hire purchase). There is a somewhat grey area when it comes to payment transfer sites like PayPal though.
Credit cards are, of course, a way of borrowing. If you use your credit card and then pay off the balance in full by the next payment date then you won’t generally pay any interest. However, if you spread the repayment over a number of months then you may end up paying a lot of interest, on top of repaying the cost of your original purchase.
What about PayPal?
PayPal as a transfer site, isn’t providing you with a product or service – you pay them and they pay the retailer. Because of this, the credit card company can say that as they didn’t have a direct relationship with the supplier, they aren’t equally liable for the goods that you’ve purchased. This means that even if you’re putting your credit card details into PayPal, as this is breaking the link between creditor and supplier, you won’t be protected under Section 75.
When using PayPal, you will still be entitled to your standard consumer rights from the retailer and protection under PayPal’s buyer protection scheme. This scheme reimburses the buyer if the item that they’ve bought online doesn’t arrive or match the seller’s description.
Although many retailers now give the option of paying through PayPal, you’ve got extra protection if you pay by credit card.