Credit cards have a dirty name due to debt, but used right they're free financial armour. If you're buying something costing £100+, put just 1p of it on a card to get huge extra protection. This has just paid off for long-time MoneySaver Scott Parsley, for paying £300 of a £26,000 car on a credit card got him £10,000 back once he discovered it was faulty.
This all stems from the fact that Section 75 of the Consumer Credit Act 1974 states if you pay for something costing between £100 and £30,000 on credit card (not debit card), the card firm is jointly liable with the retailer if something goes wrong.
While many people know about this, according to Martin Lewis, founder of MoneySavingExpert.com, few realise its full potential.
Martin says: "There are three crucial points about Section 75 protection most people overlook...
- While the item must cost between £100 and £30,000, you don't need to pay all of it on the card. In fact, if you pay for any portion on the card, even just a penny, the card company is liable for the entire amount.
- This isn't just protection when the retailer goes bust. The card firm is jointly liable, so you can choose to go to it as well as the retailer. In some circumstances this is a boon – for example, if you've bought abroad and it's too difficult to take it back. Plus, if a retailer won't play ball, you'd have to take it to court, but if a card company says no, you can take it to the free Financial Ombudsman Service – and unlike the courts, which only judge on the law, it also judges on fairness. This worked very well in the PIP breast implant refunds.
- As you have exactly the same rights as the card company, you can even choose to go to it if goods are faulty, rather than just for a lack of delivery.
Therefore the rule is simple, if you're buying anything that costs over £100, pay for some of it on a credit card for extra protection. Just ensure you pay that card off IN FULL each month to avoid interest."
A full breakdown of how this works and how to claim is in our Section 75 guide.
"I got £10,000 back after paying £300 deposit on a credit card"
Train conductor Scott Parsley breathed a sigh of relief after paying a £300 deposit on his credit card for his nearly new Vauxhall Astra costing just over £25,000.
When he discovered there was a paint defect with the motor, he was able to claim the full amount for the car back, plus interest and costs using Section 75 after reading about it on our website.
He bought his ex-demo Astra in September 2014 for £25,400, paying a £300 deposit on his Halifax credit card when ordering the vehicle, and part-exchanging his old Citroen for £9,400, and the rest was hire purchase.
But in February 2015, the 39-year-old contacted the car dealership to formally reject the vehicle under the Sale of Goods Act as paint had come off both sides of the car and roof, areas which aren't usually subject to stone chipping from driving.
After his initial email, Scott says he contacted the garage on two more occasions and Vauxhall itself once to complain. But after the car was inspected, he was only offered a partial-respray, which he said wasn't good enough.
He then forked out £202 for an independent vehicle check, which stated that the paintwork had a "number of abnormal chips present on areas not normally subjected to stone chipping during driving". The inspection deemed this was as a result of a "manufacturing flaw".
As the dealer and manufacturer wouldn't take his claim, his only resort was to go to the Halifax, knowing it was jointly liable for the purchase, having read the MSE guide. Armed with this evidence, Scott made a Section 75 claim to Halifax in April 2015.
He was forced to chase it a few months later after receiving no response and he also contacted the Financial Ombudsman Service in the hope its intervention would speed up the process, although it never took on his case as Halifax finally wrote back in July.
The bank asked Scott to sell the car and said it would refund the difference between the sale price and what he initially paid.
He sold it in July for £15,900, meaning Halifax credited the difference of £9,800. In addition, Halifax also paid him:
- £600 interest at 8% on the £9,800 difference in price he paid for the car and the price at which he sold it, plus a refund of interest previously charged on the initial £300 credit card deposit payment. The 8% interest is the standard rate across the industry which has been agreed with the Financial Ombudsman Service.
- £202 reimbursement of the independent car report.
- £120 for the inconvenience suffered due to the delay in it resolving the claim – it took around three months.
'I've won the fight. Victory!'
Scott says: "After five months of stress and persistence I've won the fight. Victory! I first found out about Section 75 using the MSE website – I've used the website for well over eight years and always refer friends and colleagues to it.
"I knew about Section 75 when I paid the deposit on my credit card, which is why I used it. When Vauxhall rejected my claim and the dealership wasn't willing to take my complaint seriously, I went straight to Halifax knowing it was jointly liable using the guides on the MSE website.
"Section 75 is a great insurance policy if you are willing to stick with the claim no matter what. I went through stages of doubting that I wasn't going to win my claim. It has been five months of constant stress but I would do it again."
What does Halifax say?
A Halifax spokesperson says: "In accordance with Section 75 of the Consumer Credit Act, we were able to agree a payment to Mr Parsley of £25,711.95, less the sale of the vehicle but plus interest.
"We would like to apologise to Mr Parsley for the delay in resolving his claim, and have paid Mr Parsley £120 for the inconvenience caused."
"I can't thank your site enough"
Here are some more inspirational Section 75 tales:
Wendy emailed us saying: "My husband bought a ski lift pass for the 2014/15 season in the Alps. No snow at Christmas – no lifts open. At the end of the season I emailed to request a refund, nearly £300. The French ski lift company would not budge. As I had used a John Lewis partnership Mastercard to pay, I approached it under Section 75 rules after reading advice on how to claim on your site. It has sent a letter refunding the whole amount. Thank you MSE."
We also revealed how Linda and Neal Marriott claimed £23,000 under Section 75 laws last October, after the kitchen company they used went bust meaning the order wasn't completed. At the time she told us her message to anyone in a similar predicament is: "Don't give up. Go on the internet and read as much as you can, there's always information on MoneySavingExpert – there's always something to help you. I can't thank your site enough."
Olly also emailed to say: "We were very surprised to find out that secondary credit card holders are apparently not covered by Section 75, which is major news to people who give second cards to their kids etc. We had an issue with a part purchased for a shared vehicle that I had made on my credit card (over £1,000). If we hadn't been able to prove this [payment to benefit the main cardholder] it is hard to know whether it would have paid up. Card companies will try their best to fight any claim made."
If you've a Section 75 success story, email us: firstname.lastname@example.org.