Hi all
As I don't posess a credit card, is there any way I can cover myself when buying high value products? I am likely to soon be spending chunks of cash on kitchen units, appliances etc. Do I have to bend to financial trends and get a credit card, or is there an alternative way of protecting yourself against companies going bust or not delivering etc?
TIA
Phil
TheScullster wibbled on Wednesday 21 April 2010 12:03
Personally I'd get a card with a suitable limit. Pay it off straight away then cancel it afterwards. It'll be +1 on your credit rating and lots of protection benefits for purchasing online.
Get a credit card, and just treat it as an extension to your bank account rather than a loan account. Arrange to pay the balance off in full every month by direct debit, that way you get no charges or interest.
Obviously you need to have the self control to not say "Yay, free money!" and go out on a spree, and you also need to be able to ensure your bank account will cope with the bill every month (pick your debit date to be just after wages if appropriate - you can often choose it if you ask). Some people can't cope with that - I can't tell if you're one or not.
The protection you get is from the consumer credit act.. you don't have to use a credit card to get it.. using a loan or an overdraft entitles you to the same protection. I also understand that visa debit cards have protection but I have not looked at the conditions.
I would not buy the items you mention except on credit card, nor anything like a laptop or TV etc.
However realise for protection under the consumer credit act there must be ONE item of >=A3100.00 value. If you buy 100 items of =A31 value or 5 items of =A320 value you are not protected. I knew this anyway, but some suppliers DO deliberately use it - a ladder supplier referenced on here will not refund =A313.50 and know a) C/C protection will not work b) Small Claims is too expensive for the sum involved. So beware.
#1 - There is nothing to stop you opening a C/C and then closing it.
#2 - It provides circa 42 days interest free. That is very useful for earning interest in the meantime, or resource- levelling cashflow, or allowing for returns - ie, you return something costing =A3500 but do not have to wait for cash to come back which can be 28-days etc.
#3 - It provides protection as above.
#4 - It allows opportunity purchases for groceries. I routinely buy groceries for my mother 2wk-6month at a time on offer, it saves her =A3380/yr which with interest rates so low makes a big difference. The savings went into Investec Global Energy early 2009 (oil 45$pb now 80-86$pb) and in turn offset energy bills - oil prices fall, bill falls =3D no lose; oil prices rise, bill rises =3D no lose.
#5 - It allows opportunity purchases for appliances. Obsolescence, end of year, recession can bring bargains with heavy discounts and free 5yr or even 10yr warranties. This is particularly useful for washing machines, but can be useful for TVs where "only 1 HDMI but S-IPS" can be priced at clearance levels.
#6 - You can set up a payment D/D to clear the whole balance at due date. Note however this carries a risk whereby fraud on your card can trigger a large payment. To this end you may consider closing the card after a time or requesting a new number (I do it annually on business cards, if refused I close the account).
#7 - A C/C is a useful emergency tool. Example being stuck in the middle of nowhere, cash sat in a current account doesn't do much. Keep it in a zipped part of the wallet.
#8 - Cashback on purchases. This is oft ignored but can mount up, a typical familly should be able to get =A340/yr cashback on groceries alone, fuel and other spend could potentially push that to =A375/yr.
Work things carefully and C/C for bulk-buy & cashback can put 20-40/ month into an investment - car repairs, appliances, prudently timed (Aug-Sep re end-of-line) laptop replacement. Over 20yrs in the right investments that can really get substantial despite inflation, gordon & devaluations not withstanding. The old days of 0% balance transfer and 0% fee AND 4% interest on cash deposit are gone - a pity :-)
So a C/C can be used smartly or very stupidly...
- It is called revolving credit - make it revolve, never pay the crazy interest charges.
- It is the most expensive loan - too many make C/C a loan at 17-25%pa interest vs 5-10% loan.
- C/C is not unsecured debt - many T&C permit conversion to secured.
- Never use C/C cheques
- Never use balance transfers - except where economics are in your favour.
- Note how credits are applied to interest owed - often cheapest debt pays off first
- Remember what bankers & government want - cash is evil because people see the notes vanish, plastic is everything because once people use it regularly they lose track of how much they spend and so spend more re VAT to Consumption Economy to unable to clear the balance every month.
If situations change resulting in a "mess", convert C/C to a loan and close all cards. That used to be the rule at Chase to Natwest any time you met a bank manager, sadly the fiscal prudence of 1984 is gone. It's all the debt you can carry, until you can't get out of it, then tax the profits it to fund nulabour. Banks are just a proxy for the state, taking the flak for idiotic credit policies & capitalising the profits whilst socialising the losses.
Tread carefully with kitchens, make sure all parts are correct because things DO get discontinued. Carcases are carcases, the difference is the drawer mechanism, doors & worktops. Kitchen fitters earn commission on the # of cupboards fitted, irrespective if you end up wearing cupboards like headphones :-)
So you are wise to be careful, and actually rather nice to hear :-) However there are economic benefits to their prudent usage.
Check the VISA debit card protection carefully (T&C).
It actually says goods is more than £100, it does not say any item has to exceed £100. If it were true then they could get out of it by selling services at say £2 per minute rather than £120 per hour. They can't do that, like wise carpet tiles don't cost more than £100 each but they can't get out of it if you order 50 @ £2ea.
Take them to court, they will lose and it will cost them far more.
CCP - Credit Card Processor (eg, VISA).
- Goods is applied line-item wise, an item must exceed =A3100.
- Goods is applied per contract (some suppliers charge shipping separately).
- No cover for deliveres to anything but the registered address.
CCC - Credit Card Company (eg, MBNA).
- Their T&C generally DO go beyond those of the CCP
- Generally goods refers to the total invoice, but not delivery
- However they can not claim from the CCP in doing so
Some CCC just pass thro T&C of CCP. Some CCC are more lenient - but do so at their cost (no redress from CCP). eg, some suppliers will only ship to a registered address, even if your CCC permits otherwise. That is because the protection provided to the supplier by the CCP requires it - that your CCC does not forms no redress for the supplier.
Terms & Conditions: Trading Standards will advise that T&C can exclude just about anything subject to a test of reasonableness in law. That test of reasonableness need not be from a consumer, but from a DTI or T/S action - many companies get their T&C "rewritten" following complaints for example :-) I mention this particularly re kitchen companies, who are a bit like double glazing firms - only the latter employ more lawyers.
So what the CCA says can require legal action to enforce in certain situations.
The only common "baul" I know of are...
- International claims >=A3100 because some banks want to restrict CCA to UK
- Claims beyond a certain time limit set in T&C, eg, 90-180 days
A =A393 item with =A38 shipping can cause problems re "goods v shipping". More often than not the CCC will eat anything reasonable the CCP doesn't.
I have a suspicion the CCP applying "goods" to individual item >=A3100 comes from a very large service fraud in 1990s, probably telephone related, in as much as it tries to restrict liability for a certain type of fraud. So CCA > CCC > CCP > T&C as it were.
Can anyone translate that for me please?
Dave
IMO two C/C's is a useful emergency tool. One account can get temporarily blocked for several silly and serious reasons, and if you are in the middle of nowhere while travelling it's a real problem.
However, that said, One (or two) cards takes a great amount of personal effort in control. I know (and respect their decision) of friends who refuse to have anything to do with them.
Get an Egg credit card and pay it off in full each month. They also give you
1% of what you spend back as a credit at the end of each year. A no brainer really.Peter Crosland
I am not sure you'd get the protection from an overdraft. How would you prove that the overdraft paid for it, and not a credit balance.
JW
And buy the goods from somewhere that you can use via Quidco...
The general reading of the CCA is you are protected for payments >
=A3100.
However, an issue can arise with some card companies where a) goods are say =A393 and postage is =A38, b) numerous goods are individually less than =A3100 even though the total transaction is above =A3100, c) international purchase fraud particularly re double transactions where cardholder IS present. In all the above CCA should protect you, but in obscure cases you can have a battle.
On balance a C/C is worth more than its weight in gold for protection, cashback & cashflow. You buy a TV, not like it, return it but then buy another without to wait for a refund back to current-account. If the company goes bust before the refund (as happened in 2008) you are still protected. This is important re big-ticket appliances & kitchens.
Re having two C/C... A very good idea because fraud does happen and the block on a C/C can be very inconvenient.
At least keep the C/C in there for "those purchases where it is suitable".
The general reading of the CCA is you are protected for payments >
£100.However, an issue can arise with some card companies where a) goods are say £93 and postage is £8, b) numerous goods are individually less than £100 even though the total transaction is above £100, c) international purchase fraud particularly re double transactions where cardholder IS present. In all the above CCA should protect you, but in obscure cases you can have a battle.
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You are wrong. You are certainly not covered for (a) and (b)
tim
By only writing a cheque for the item and having zero balance at the time?
Be aware that many CC companies will cancel a Direct Debit if you don't use the card for a long time - typically 12 months. This happened to me: hadn't used one CC for about 18 months, payed for something then, when I was expecting the statement to say when the DD would be taken there was a charge! The explanation was that the DD had been cancelled 'in case it was misused'! Actually, I reckon that tit's a ploy to get charges, as paying in full every time isn't profitable for the CC company.
I never spend on a CC more than I have in the bankk; also I deduct the payment from the balance immediately, so there's more in the bank than shows on the record sheet. A CC is a tool to be used with the necessary 'protection', same as any other tool.
They are payment card processors - whether it's a credit or debit card is a matter for the Issuer (bank which issued the card). Payment card processors don't provide any credit, and fully settle between Issuer and Acquirer (merchant's bank) daily. In the case of a credit card, the Issuer (e.g. Barclaycard) provides the credit, and not the payment card processor (e.g. VISA or Mastercard).
"Issuer".
Payment card processors are international, as are their rules, but they don't deal directly with any consumers, only banks (Issuers and Acquirers).
Issuers (and Acquirers) have to work within rules which conform to local/national laws.
It doesn't apply I'm afraid. Neither does a loan - unless it is for the specific purpose of buying goods that are part of a consumer-bank-supplier agreement.
JW
Extremely interesting part from:
Here's a quick example of how it works.
Savvy Salma spots the high tech TV she's been planning to buy at half price for £500 including delivery in a high street sale. Yet she's only got £10 left on her card limit (don't worry, it's a cashback card, she's going to pay it off in full).
Salma pays £10 of the cost on her credit card and the rest on her debit card. Sadly the next day the store goes bust, before her telly is delivered. Yet she can claim the WHOLE £500 back from the credit card company, because she paid in part on the card.
Therefore if you want protection.
As long as it costs more than £100, pay for even a fraction on a credit card and you're protected.
Actually, in the big scheme of things, Visa and MasterCard are little more than networks which route transactions between Acquirers and Issuers. They are referred to in the industry as the 'payment scheme'. The payment card processing is done either by the Issuer themselves (e.g. HSBC) or by a third party processor, like First Data or TSYS.
Although I'd agree with you that both Visa and MasterCard are international, actually, you end up dealing with Visa International or Visa Europe/other region, and similarly MasterCard International or MasterCard Europe/other region. They do have differing rules across their various regions.
Agreed - in the UK, it is UKPA (UK Payments Administration) (was APACS).
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