Credit Card Charges

The card company only has a maximum 40 days to respond. If you don’t hear anything back, follow up with a phone call. If you're still getting a wall of silence, then report it to the Information Commissioner for a breach of rules.

Step 2. Get a ‘backup’ credit card in case of closure

Sadly, if the card is still active, some providers may close your card account when they pay out the cash – a bit of a "we'll pay up, but get lost" gesture. So if you’re still using the card, you need to take this into account. Luckily it’s easy to sort out.

If you can simply pay the debt off, great. If not, apply for a new card or cards to gain a big enough credit limit to shift the debt to; this should also save you money (see the Best Balance Transfers guide).

If you have a poor credit score so you can’t get cheap new credit, then as long as you have available credit on any other cards, you can use your overdraft to repay your card, or you can get a bad credit scorers' card as an emergency, use this.

Don’t be overly scared by the prospect of this. The Financial Ombudsman has ruled against providers closing accounts and it happens less than it used to. So if yours is closed, it’s worth making an official complaint. You may be due even more compensation.

Step 3. Write to your credit card company and ask for your money

Now it’s time to contact the credit card company to ask for your cash back. All you need to do is write and say you believe all your past charges were unfair (don’t forget to detail them) and you want your money back.

The 2006 OFT report greatly improves the chances of a successful reclaim, although it does mean there are different amounts you can ask for depending on when you incurred the charges, and how much work you want to put in.

How much should I ask for?

This is where it gets a bit trickier. But don’t worry, it’s simply about how hard you’re going to push. Remember, the OFT has pretty much indicated any charges higher than £12 are challengeable.

• Charges from before June 2006. Credit card charges from before this date will usually have cost between £30 and £35. With these, you can ask for either the full amount of each charge to be refunded or the difference between the actual charge and the OFT-recommended fee of £12. So, a charge of £35 minus £12 would give a refund of £23.

• Charges after June 2006. For any charges on or after June 2006, you were probably hit for £12 each time. As this is already set to the OFT-recommended amount, you simply need to ask for the full £12 amount to be refunded.

The pros and cons

Providers are much more likely to pay out the ‘difference’ figure than the full figure; so if you just want the easiest route, this is for you. Alternatively, many have succeeded in getting the full fee back (especially for pre-June 2006) as credit card companies aren’t keen to justify their charges in court. Though this may mean more of a fight, and you could end up needing to ask the Financial Ombudsman to take on your complaint or start court action.

Whilst most people shouldn’t need to get this far, it’s likely to take slightly longer - but balance this with the possibility of receiving a bigger payout. Having said that, as I believe the charges are unlawful, I think it’s worth asking for the full refund at this stage. You can always change your mind later on if you are offered a settlement for the difference between what you were charged and £12.

Charge interest on top

If you were to go to court and win, you would be entitled to add 8% interest (not compounded) on top of your claim, from the date you were ‘first deprived’ of the money (ie the date of each charge).

Therefore as a negotiating tactic, you may want to ask for the interest as part of your initial claim. Do understand though, you’re not legally entitled to interest unless you win in court. Asking for interest now is all part of pushing the lender. Think of it as a bit like haggling.

You may strike lucky and get the interest on top. Even if not, asking for it could help push the provider to settle quickly, as it may just say “here’s the money, without interest”. In which case, I’d grab it.

Of course there is a risk that asking for too much makes it less likely to settle too - sadly this is an art, not a science. If you'd prefer to play safe, simply ask for the charges without interest in the early stages.

The Credit Card Interest Calculator

If you do want to ask for interest, the calculator below will work it out for you. Just enter each of your charges (or the difference between your charge and £12 if you’re using that route) and add them to the list.

When you’re ready, click ‘print’ and a new window will pop up with a schedule of your charges. To save the list and avoid typing it in again, highlight the text in the window, then copy (Ctrl + C) it and paste it into Word.

A technical note: while it’s rare with these cases, submitting a claim for less than £5,000 doesn’t guarantee it’ll be heard as a small claim. If it’s contested and seen as a difficult case, it can be tried in the county court as a non-small claim (on what are called the ‘fast track' or the ‘multi track'), which could mean you have to pay costs, though this is very rare.

What happens next?

After you’ve submitted a Moneyclaim, what happens next depends on the card company’s reaction. It takes five days for the claim to be ‘serviced’ and all deadline dates start from that point.

• VICTORY: The credit card company settles in full
  

  
  For the sake of expediency the company may settle in full as a ‘goodwill gesture’, including interest and court fees; though it almost certainly won’t admit it ever did anything wrong. This is most common for smaller claims.

• VICTORY: The credit card company does nothing
  

  
  Often the company simply doesn’t acknowledge the claim and this means you automatically win by default, 14 days after the claim is served (which takes five days). At that point, you must request ‘judgment by default’, this can be done online, and you should do it as soon as possible (get it in your diary and plan around it, to the second if possible) after the 14 days ends.

• VICTORY: The claim’s acknowledged but there’s no defence
  

  
  Companies have 14 days to acknowledge a claim after it's served. If that’s done, they have a further 14 days to respond and enter a defence. Commonly they do an acknowledgement, but no defence is entered. Again this means you win, though this time after 28 days. At that point, immediately request a ‘judgment by default’; this can be done online.

• It says it will defend the claim
  

  
  I know this is the point where people get scared, which is what the companies want. But even if your credit card company does this, don’t worry. In most case it's simply a way to try and make you settle, or argue that you've asked for too much (eg, you've gone beyond six years or tried to claim too much interest).

  At this point, you’re now in the proper court process. You’ll be sent a straightforward form called the Court Allocation Questionnaire which you need to fill out and return to the court with a £40 fee. The next stage should be a small claims hearing date, although this might not happen as the company could offer a settlement first.

  If you get to the hearing stage, there is a further fee of £25 - £325, depending on the amount of your claim. What could happen is that the companies will either not turn up, in which case the judge simply throws the case out and awards in your favour, or will ask for a stay of your case. See below for more info on what to do if this happens.

  It’s worth me repeating that all fees are refunded if you win. If you can’t afford the cost, read the Financial Ombudsman section, as it’s free.

  In case your reclaim is different, it’s worth doing proper preparation before your court date as the judge is likely to question you and it’ll make you feel more confident if you understand your complaint.

• Your case is stayed
  

  
  Since the OFT announcement to run a test case into bank account charges in July 2007 a few banks requested that credit card claims be dealt with in the same way, and sadly some local court judges did although the OFT test case is specifically about current accounts.

  If this happens to you, contact the court to clarify that your claim is in relation to credit cards. It should either suggest you request a removal of the stay, by completing form N244 and paying a fee of £75 or that you write a letter to the court explaining that you wish the stay to be removed and why.

  Writing a letter in the first instance would save you the £75, although you would get this back if, and hopefully when, you win, and if this doesn’t work you can put in the official form afterwards.