Wednesday 28 May 2014

How your credit card can save you from faulty goods: What everyone should know about their rights to a Section 75 refund

PUBLISHED: 03:26 EST, 28 April 2014 | UPDATED: 02:42 EST, 29 April 2014

Ever bought an item only to get home and found it doesn't work? Or booked a hotel room only for the owners to go bust?

If you've used a credit card to make these purchases, then you have rights to a refund even if you're turned down by the retailer or service provider, as UK law considers your credit card company equally liable if you suffer a breach of contract.

This protection is provided by the Consumer Credit Act 1974, and This is Money has put together this guide detailing what protection this offers, how it works and how you can make a claim.

Protection: Section 75 entitles you to refunds from your credit card provider when using making purchases that are faulty, or not as described.

What protection do I get?

Section 75 of the Consumer Credit Act 1974 gives credit card users protection in the event they suffer from a breach of contract or misrepresentation when buying goods.

It removes the risk that people could be put into debt for goods or services that weren't received at all, were faulty, or were otherwise not as described.

It also provides protection for purchases made from companies that then go bust before the service can be provided - such as a flight or concert.

In these circumstances, the law holds the credit card company jointly liable with the retailer, meaning you can claim a refund from your card provider if you're unable to get it from the retailer.

More...

How does it work and what are the limits?

Section 75 offers protection for items or services valued £100 up to £30,000, of which at least part of the purchase was made with a credit card. Purchases under and over these thresholds cannot be considered.

So, if you buy something for £500 but only pay £50 with a credit card, you would be protected for the full amount.

However these thresholds only apply to single transactions, so for example if you buy two concert tickets at £99 each at the same time, these would not be covered unless they were bundled by the promoter as a 'two-for-one' deal.

You would also not be covered even if admin fees and delivery charges took the total cost of a single item above £100.

There isn't a time limit for making a claim under Section 75, however the statute of limitations in the UK is six years (five in Scotland) so this is the deadline you have to work to if you were to pursue a Section 75 claim through the courts.

Does it cover debit cards and other forms of payments?

No, protection for items bought with a debit card have a different protection, known as chargeback.

This isn't enshrined in law, but forms a part of card provider rules and provides protection for purchases made under £100 as well. You can read more about chargeback here.

The law is relevant in instances where the credit has been provided under a 'pre-existing' arrangement between a retailer/supplier and a credit provider.

This arrangement will exist because the supplier accepts purchases made by consumers using cards belonging to credit networks like Visa and Mastercard.

As such, you don't get any protection for purchases made using cheques or credit card cheques - as they can be made payable to anyone - nor if the purchase was made indirectly by using a credit card to withdraw cash and then make the purchase.

Charge cards, most prepaid cards and gift cards are also not covered as they don't operate under a credit agreement.

Are there any other instances when I'm not covered?

If you are the main cardholder but have an additional credit card on your account for use by a partner, child, or friend and use it to make a purchase you then need to claim for, you need to show that you stood to benefit in some way from the purchase.

So if your wife uses her additional credit card to buy a gift for her husband that turns out to be faulty, then they would be protected as the husband, the main cardholder, stood to benefit from the purchase.

Gifts: Provided the main cardholder benefits from the purchase, goods bought using an additional credit card are protected under Section 75.

If however she used the card to buy a trip for herself and friends, then she wouldn't be covered as the husband wouldn't benefit (apart from having the house to himself).

You're also not generally covered when you make purchases through a third-party - ie. not the actual supplier of the goods or services - though this can be argued in court.

This covers purchases made through travel agents (although holidays have separate protection through ATOL) and transactions made online through services like Paypal.

Purchases made through websites like Amazon Marketplace are also unlikely to be covered under Section 75, likewise with group-buying websites such as Groupon.

Am I covered for purchases made abroad?

Yes, any purchases you make while overseas is protected, provided it's valued at between £100 and £30,000.

This extends to goods or services you buy from a company based abroad as well, whether made online, by phone or by mail order.

Covered: Credit card providers should provide refunds for flight tickets for airlines that then go bust.

How do I go about claiming?

Using Section 75 shouldn't necessarily be the first thing you do when you've been let down by a retailer, initially you should contact the company you made the purchase from and try and get a refund that way.

Although the credit card company is jointly liable, you are more likely to sort out the issue quicker by going to the retailer first.

You are also far more likely to get all the help possible from your credit card company if you have been to the person who supplied the faulty goods or failed to deliver a service first.

In the event they refuse or if you don't get a reply, then you should write to your credit card provider, including the following information:

What you bought, where, when and how you bought it, and how much you paid. Include copies of receipts.
Details of how the goods and services you received constituted a breach of contract as they were either faulty, not as described, or were not received at all.

Details of attempts you've made to contact the company and the responses you've had.
An explanation of what you want from the credit card company - namely to refund the money you paid for the goods you've received.

If you are rejected for a Section 75 refund and are adamant you think this was an unfair decision by your credit provider, then you can make a complaint to the Financial Ombudsman Service.

How your credit card can save you from faulty goods: What everyone should know about their rights to a Section 75 refund

By ADAM UREN

PUBLISHED: 03:26 EST, 28 April 2014 | UPDATED: 02:42 EST, 29 April 2014

View
comments

Ever bought an item only to get home and found it doesn't work? Or booked a hotel room only for the owners to go bust?

This protection is provided by the Consumer Credit Act 1974, and This is Money has put together this guide detailing what protection this offers, how it works and how you can make a claim.

Protection: Section 75 entitles you to refunds from your credit card provider when using making purchases that are faulty, or not as described.

What protection do I get?

Section 75 of the Consumer Credit Act 1974 gives credit card users protection in the event they suffer from a breach of contract or misrepresentation when buying goods.

It removes the risk that people could be put into debt for goods or services that weren't received at all, were faulty, or were otherwise not as described.

It also provides protection for purchases made from companies that then go bust before the service can be provided - such as a flight or concert.

In these circumstances, the law holds the credit card company jointly liable with the retailer, meaning you can claim a refund from your card provider if you're unable to get it from the retailer.

More...

How does it work and what are the limits?

Frustration: Buying goods that don't work when you get them home entitles you to a refund.

So, if you buy something for £500 but only pay £50 with a credit card, you would be protected for the full amount.

You would also not be covered even if admin fees and delivery charges took the total cost of a single item above £100.

Does it cover debit cards and other forms of payments?

No, protection for items bought with a debit card have a different protection, known as chargeback.

This isn't enshrined in law, but forms a part of card provider rules and provides protection for purchases made under £100 as well. You can read more about chargeback here.

The law is relevant in instances where the credit has been provided under a 'pre-existing' arrangement between a retailer/supplier and a credit provider.

This arrangement will exist because the supplier accepts purchases made by consumers using cards belonging to credit networks like Visa and Mastercard.

Charge cards, most prepaid cards and gift cards are also not covered as they don't operate under a credit agreement.

Are there any other instances when I'm not covered?

Gifts: Provided the main cardholder benefits from the purchase, goods bought using an additional credit card are protected under Section 75.

If however she used the card to buy a trip for herself and friends, then she wouldn't be covered as the husband wouldn't benefit (apart from having the house to himself).

You're also not generally covered when you make purchases through a third-party - ie. not the actual supplier of the goods or services - though this can be argued in court.

This covers purchases made through travel agents (although holidays have separate protection through ATOL) and transactions made online through services like Paypal.

Purchases made through websites like Amazon Marketplace are also unlikely to be covered under Section 75, likewise with group-buying websites such as Groupon.

Am I covered for purchases made abroad?

Yes, any purchases you make while overseas is protected, provided it's valued at between £100 and £30,000.

This extends to goods or services you buy from a company based abroad as well, whether made online, by phone or by mail order.

Covered: Credit card providers should provide refunds for flight tickets for airlines that then go bust.

How do I go about claiming?

Although the credit card company is jointly liable, you are more likely to sort out the issue quicker by going to the retailer first.

You are also far more likely to get all the help possible from your credit card company if you have been to the person who supplied the faulty goods or failed to deliver a service first.

In the event they refuse or if you don't get a reply, then you should write to your credit card provider, including the following information:

What you bought, where, when and how you bought it, and how much you paid. Include copies of receipts.
Details of how the goods and services you received constituted a breach of contract as they were either faulty, not as described, or were not received at all.
Details of attempts you've made to contact the company and the responses you've had.
An explanation of what you want from the credit card company - namely to refund the money you paid for the goods you've received.

If you are rejected for a Section 75 refund and are adamant you think this was an unfair decision by your credit provider, then you can make a complaint to the Financial Ombudsman Service.

Borrow interest-free for 32 months: The best balance transfer credit cards to help clear your debts

By ADAM UREN and AMY ANDREW and EMMA GUNN

PUBLISHED: 10:04 EST, 9 January 2013 | UPDATED: 08:19 EST, 20 May 2014

View
comments

Generous introductory offers on balance transfer credit cards have been steadily re-emerging in the years since the credit crunch. With proper use they can provide the cheapest escape route for those resolved to clearing their debts.

Freedom: Balance transfer cards are a useful tool to help you get out of debt.

Switching your debts to a balance transfer card can speed up the repayment of debt because most, or all, of your repayment goes toward wiping out the balance and not paying interest. The best deals offer up to two years of 0 per cent interest in exchange for a switching charge.

Those with short to medium-term debts can use such offers to finally get out of the red, while those with much more to repay can look to these cards to provide a lower cost alternative to their existing debts.

But beware: there are caveats to consider and barriers to overcome when applying for such cards (see box).

Many balance transfer cards also come with a 0 per cent period for new purchases as well - card companies aren't providing cheap credit as a favour, they want you to spend more on the card and maintain that new debt, which is much more profitable for them.

Remember, you are trying to repay your debts, not build up more. So think hard before buying anything else with credit.

This is Money has compiled a selection of the best deals currently available in the balance transfer market.

This page is kept updated throughout the year - bookmark it for the very latest developments.

Longest interest-free period cards

Market leader:

The never-ending battle for the top spot of the best buy tables continues, as usual Barclaycard has recently increased its 0 per cent balance transfer period securing its leading position.

It now offers 32 months on its Platinum Extended balance transfer card - offering the longest interest free period on the market.

The credit card comes with a 3.5 per cent fee, which means you would pay £35 to transfer over £1,000 from other credit cards.

But if you transfer the balance within 60 days of opening the account you will receive a refund on your transfer fee, bringing it down to 2.99 per cent.

The money will be credited to your account after your balance transfer has been successfully completed.

You must have a salary of at least £20,000 to apply. Any amount you transfer must not exceed 90 per cent of the credit limit on the card. But you will be hit with 18.9 per cent interest after the introductory period ends.

Barclaycard has a second competitive product- its Platinum Balance Transfer card - which offers 30-months interest free and fees of 2.89 per cent after you get a refund from an initial 3.5 per cent fee.

BEST 0% BALANCE TRANSFERS


	Provider	Duration*
1	Barclaycard	32mnths
2	Barclaycard	31mnths
3	Halifax	31mnths
4	MBNA	30mnths
5	Tesco Bank	30mnths

*Fees apply

Halifax has recently upped its game with a Balance Transfer Credit Card which comes with 31 months interest free on balance transfers and a fee-free purchase period of six months.

But it costs a slightly more to make the transfer than the rest of the best-buy deals at three per cent. The standard interest rate is 18.9 per cent.

MBNA has a 30-month Platinum balance transfer card with a transfer fee of 2.89 per cent. If you want to make a money transfer to use for paying off an expensive overdraft or loan you will pay a 4 per cent handling fee.

The card offers three months interest-free on purchases as well, but after the introductory periods end interest on balance transfers and purchases shoots up to 18.9 per cent.

Tesco Bank's Clubcard Credit Card is offering 0 per cent for 30 months when you move debts across as well as three months of interest-free purchases.

The balance transfer fee is 2.9 per cent, which is not the lowest on the market, but you do also get Clubcard points on spending.

Customers receive Clubcard points on all their spending receiving one point for every £4 spent on their card. The Clubcard Credit Card also doubles as a Clubcard in Tesco stores allowing customers to earn five points for every £4 spent.

Find out more about how you can clock up Clubcard points on your credit card with This is Money's best credit card guide

RESTRICTIONS ON BALANCE TRANSFER CARDS

Being approved for a balance transfer card is by no means guaranteed.

In theory, those with the best credit ratings are the most likely to be approved for a card as they will have a history of paying off debt on time and have a stable income.

It is more probable that those with poor credit ratings will be rejected.

Those who are refused should bear in mind that applying for a number of other balance transfer cards in a short space of time will worsen their credit rating.

Many card providers will not allow you to transfer balances from another of its own products, so you should identify the best deal for you outside of your existing providers before making an application.

Some providers meanwhile may only accept your application if you already hold a current account with them.

There are other restrictions you will also have to satisfy, such as having a minimum level of income (generally £10,000-£20,000).

And to take advantage of introductory 0 per cent offers, you will have to transfer your balance within a specified time-frame.

Lowest handling fee cards

For those confident they can pay off their credit card debts in a short space of time, then getting a balance transfer card with a lower handling fee, but lower interest-free period, can limit the extra charges on your debt.

Competition is tight with the top four our five providers offering fees below one per cent and fairly decent balance transfer windows too.

Market leader:

Tesco Bank charges just 0.65 per cent to shift debts to its Clubcard Credit Card with low transfer fee.

It also offers 12 months interest free on balance transfers and puchases and a standard interest rate of 18.9 per cent.

Bank of Scotland and Lloyds Bank have released a Platinum Balance Transfer card offering 15 months interest free on balance transfers with a 0.7 per cent fee.

The card also comes with six months interest free on purchases and a standard interest rate of 17.9 per cent.

Nationwide is offering a slightly better deal though if you would rather pay a little more upfront for a longer interest free deal. Its gives 26-month interest-free but comes with a slightly higher transfer fee of 0.75 per cent, on two different credit card options.

Customers signed up to Nationwide’s FlexAccount, FlexDirect Account or FlexPlus Account can take out the Select Credit Card.

This comes with 0 per cent interest on purchases for 15 months. 0.5 per cent cashback on purchases and unlimited commission free purchases while overseas.

Alternatively, the deal also applies to the building society's Nationwide Credit Card, which is open to everybody. Sadly, however, it does not come with any cashback perks and the free interest on purchase only lasts three months.

The Select Credit Card has a standard rate of 15.9 (APR) per cent, while the Nationwide Credit card charges 17.9 (APR) per cent.

Fluid also offers a 0.75 per cent fee. The Fluid card, issued by MBNA, however comes with a much lower interest-free term at just 12 months to pay off your debt.

Halifax All in one Credit Card comes in second with a fee of 0.8 per cent, but it has a longer 0 per cent balance transfer window than the fluid card at 15 months.

With this card you will have to pay an initial balance transfer fee of three per cent, before you are granted a 2.2 per cent refund.

Best low rate balance transfers

People who have racked up substantial credit card debt which is unlikely to be paid off within two years can plump for balance transfer cards which offer lower rates of interest.

However, those who are considering this option should seek advice as to whether there might be a better deal to be a had consolidating such debts into a loan, particularly with borrowing rates at record lows at the moment.

Market leader: Lloyds Bank and TSB

Lloyds Bank and TSB lead the pack offering table topping low-rate balance transfer deals.

Both offer Advance credit cards with interest on balance transfers of 4.9 per cent for the first 12 months. After that the rate reverts to the standard card rate of 11.9 per cent which is still significantly lower level of interest than typical credit cards.

You will pay a three per cent transfer fee and in order to get the introductory rate you will have to transfer your balance in the first 60 days.

The cards also come with six months 0 per cent interest on purchases.

Monday 26 May 2014

How to improve and protect your credit rating and check your credit report

By THIS IS MONEY

UPDATED: 04:58 EST, 14 May 2014

View
comments

Your credit rating and report is what lenders look at when they decide what to offer you.

Making sure yours is accurate and working to improve your score is essential to getting the
best mortgage, credit card, or loan and also affects other products such as mobile phone contracts. See our guide to improving your score or challenging wrong information.

Stress relief: Could you be turned down for credit? Find out before you apply.

Why does a bad credit rating matter?

A bad credit rating can limit your borrowing options. County Court Judgments (CCJs), defaulted payments and bankruptcy orders leave a black mark against your name when trying to secure credit.

Meanwhile, if you miss credit card payments, direct debits for energy bills, or other commitments, you could find a mark placed against your name that will cause you problems.

The first sign can often be when you apply for credit and get turned down. This then leaves footprint on your file and if you collect a lot of these it could make matters worse.

Usually, the only means of credit available to borrowers with poor credit ratings is through what is known as the sub-prime market, where would-be borrowers are charged high rates of interest to reflect the perceived risk to the lender. Currently borrowing in this market is severely limited.

Credit agencies: Check your rating

Most lenders go through two main credit reference agencies for information on your financial past -Experian and Equifax.

THE 30-DAY FREE TRIAL TO CHECK YOUR CREDIT REPORT

This is Money offers readers the chance to sign up to Experian's Credit Expert 30-day free trial, so that they can check their credit report.

The free trial is offered to new members of the service only and a monthly fee, currently £14.99, applies after the 30-day free trial.

You need to provide payment details to sign up, but should not be charged if you cancel the service within the 30 days.

The free trial period starts on registration – further ID verification may be required to access full service, which may take up to five days.

As part of the £14.99 monthly fee you will be paying £6.40 for Identity Fraud Expenses Insurance.

There is no option to cancel this when you sign up for the free trial, but if you decide to keep the Credit Expert service after the free trial you can cancel the insurance element by contacting Experian.

There is a third main credit agency that is less used CallCredit.

Credit agencies compile credit histories from a number of sources, including the electoral roll, County Court Judgments and how effectively past debts have been paid.

Every time you open a new form of credit it will leave an electronic footprint on your record.

The decision to turn borrowers down for credit isn't made by Experian or Equifax but by the lenders, based on their own criteria. Although you may find the lender simply tries to tell you that you need to speak to the credit agency.

How do I improve my score?

There are some basic checks you can make to improve your rating:

Make sure all your debts are registered to your correct name and current address
Ensure there are no other mistakes on your file, such as other people's debts or payment
Register on the electoral roll at your current address.
Don't make too many applications for credit in a rush - and that includes things like mobile phone contracts. Lenders translate that as desperation. Space out applications.
Apply for credit you are likely to get. Also, ask lenders in the first place to only do a 'quotation search' - asking for a rate first - rather than a 'credit search'.
Show lenders you're a responsible borrower by borrowing and paying it back. It might mean taking a credit card with a very high interest rate. Only spend small amounts and then keep clearing the balance, thereby not being charged interest. You need to do it for at least six months.
Do everything in your power to keep up all agreed repayments ask for smaller repayments if you're finding it impossible.
Close down any credit agreements you no longer use.
Joint finance done with someone with a bad rating will affect your rating. If you split, write and tell the debt agencies.
Things lenders like on application forms:

- Fixed land phone lines rather than mobiles
- Long-term employment history
- Long-term living in one place, ideally owned rather than rented.
- Long-term record with the same bank

Data protection

If a lender refuses you credit, it must say why. Under the Data Protection Act, if you are refused credit, and scoring was used to help the lender decide, you can ask for a review of your application.This gives you the chance to review your rating and see where it may need improving. Alternatively, it gives you the chance to point out mistakes that may be on your record.All is not lost if your rating is poor - although it may take time to repair. Bankruptcy details remain on people's ratings for up to six years, but for most minor problems it should take a year of good credit habits to return a rating to health.

Building a credit history

One alternative way of boosting your rating is taking out store cards or credit cards, using them and paying off the balances on a regular basis. Opening a variety of accounts will speed up the process, but be sure to clear balances regularly to avoid sky high interest charges. And don't fall in to the trap of missing payments and thereby making your situation worse.It may be worthwhile asking a family member or good friend with a good credit history to co-sign for a small loan or credit card. This will re-establish good credit in your own name.It takes some time for your new credit history to gain momentum, but it will help prove to lenders that you are reliable and credit worthy.Another tip is not to keep applying for credit if you have been refused by other lenders. A large number of searches on your credit history can make matters worse, so make an application only after you have confirmed with the lender that you fit the profile of people they lend to.

Never had credit but still been turned down

Many people complain they have never applied for any credit - and therefore had no credit problems - yet have still been rejected.

Bizarrely, the credit industry feels more comfortable dealing with people who have a track record of paying off credit so you do actually have more chance of making a successful application if, for example, you have taken out a mortgage or loan previously.

This problem is easily solved. Take out a credit card, spend some money on it and pay it off each month. Lenders will now see that you can do this sensibly and will be more likely to lend you money.

Common problems

My bank has given me a bad credit score for busting my overdraft limit. Can it do this?

Yes. If you continually exceed your overdraft limit and then don't put fresh funds into your account you could get a bad mark on your credit file.Many people forget that overdrafts are credit agreements, just like loans. If you fail to pay anything off in a month it is the same as missing a payment on a loan.

There's a problem with my address

A frequent problem is if the address on your credit file does not match your address. This is often a problem if your house has a name, has a number and a letter, or is one of a number of flats converted from an older house.Find out how your local council lists your address and follow its lead. It is likely that most banks would use the same style that is on the electoral roll.Experian say if you don't submit your address as Royal Mail lists it then it will not match up. In this case, contact Royal Mail on 0845 6011 110.

My address has been blacklisted?

It shouldn't be. Contrary to popular belief, there is no such thing as an address with a bad credit history. Since 2004, credit reference agencies have changed the way they handle your details. Frequently, if someone with a similar name lives at your address, then a second stage of identification will have to be completed.The old information, dating back to before 1993, listing addresses with bad scores, has been wiped from the system. Credit scores are done specifically on your name, address and bank details. If someone else in your property has a particularly bad credit score, then it will not affect yours unless you have a listed financial relationship with them. However, it is worth checking to make sure their details have not accidentally slipped on to your record.Source : Daily Mail